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Technology Stocks : Amazon.com, Inc. (AMZN) -- Ignore unavailable to you. Want to Upgrade?

To: Tom D who wrote (1441)	2/4/1998 10:36:00 PM
From: the Druid	Read Replies (2) \| Respond to of 164684

Tulips had their value and merits too(once upon a time). Amazon certainly has more appeal and value than a bunch of tulips. One can always wish and hope for higher valuation. One can always wish that nothing ever come down, even in the face of competition, even with skyhigh valuation. I feel safer taking the short position LONG term.

To: Tom D who wrote (1441)	2/5/1998 12:43:00 AM
From: Don Westermeyer	Read Replies (1) \| Respond to of 164684

Tom, AMZN is a good business. I'd like to comment on some of your points. stock rises-so many claims that the rises are fraudulent market manipulation. It most certainly has been manipulated, especially with short squeezes when end of quarter reporting goes on. Even the media has picked up on this in the past. The first reason which may support such a large market valuation is that the company has consistently exceeded sales projections. Analyst reports from June '97 projected Q3 '97 revenues of $25M (vs. actual $38M) and Q4 of $35M. Company also exceeded more recent, upwardly-revised projections for Q4 quite handily. True, but that does not make the company infinitely valuable either! AMZN isn't anywhere near profitable even with mushrooming sales and little competition. How likely is it that AMZN could have earnings of $1 billion on revenues of $5 billion in ten years? How likely is it that AMZN will keep growing without BKS, CUC, etc. declaring war in the marketplace? They will not just give sales up! Candlestick speculated that books could be obsolete in 5-10 years. So far the computer has not replaced newspapers and books because the latter are so cheap, portable and markable with highlighters. Sorry Candle, but I don't see this happening either (and wouldn't want it anyway!). I have not seen another issue discussed in the last few hundred postings. That is the fiscal weakness of AMZN's competition. In brief, BKS and Borders use off-balance-sheet operating leases to finance most of their stores. BKS in particular is not weak! Banks don't think so either as BKS gets loans near 6% where AMZN gets them near 9.5%! 2) Insiders may not sell They should! One never knows about this activity until it is too late. It is unlikely they won't cash out considering how much personal interest they have in the company. Bezo's could liquidate only 10% of his holdings and it would be a million shares. Look at RMBS as an example when a large sales is done relative to the float. A lot of longs got burned pretty bad when the insiders sold. What if the institutional insiders and venture capitalists are holding on for five years-where does that leave the shorts As long as demand for the stock goes way down the shorts will make out just fine. This could happen if the fear of competition sets in. Look at what happened to EGRP when a few competitors popped up. EGRP is even profitable! Most short sellers would not hold short for 5 years, but there are plenty of new shorts always waiting to get in on this stock. BTW - AMZN will run out of money long before any of this happens, unless they want to get some more loans (probably at 10% the next time). They can keep on getting expensive loans, or do a secondary. As a short guess which one I'm counting on? Nice chat! I'm obviously short this thing. I sleep a lot better at night than if I'd placed a big bet on the long side. Actually it is best to keep any bets, er investments, small on this stock anyway.

To: Tom D who wrote (1441)	2/5/1998 8:37:00 AM
From: John May	Read Replies (1) \| Respond to of 164684

Tom D. Great post! Glad you're here; I've been a voice in the wilderness among Candle & Co. - the tenacious AMZN shorters. Haven't had much luck with them, and I don't give you much chance, but I'm glad they're here. A thread without contrary opinions is no debate, just a bunch of cheerleaders. To believe in AMZN is to believe in the future of the Internet. Good article: my.excite.com Among other things it says: <<Online shoppers should double their spending to $4.8 billion in 1998 from the $2.4 billion recorded in 1997, according to a recent survey published by consulting firm Forrester Research Inc. The report predicted online sales revenue would skyrocket to a whopping $17.3 billion by 2001. "The clear trend is that online consumers are converting from window shoppers to buyers," said Kate Delhagen, senior analyst for people and technology strategies at Forrester Research.>> There's been a lot of renewed talk about AMZN entering music business. Has there been an announcement? NTKI (Music Boulevard) weakened recently. Is AMZN the reason? Anybody know? Bob, how many points are you giving me on Carolina tonight?

To: Tom D who wrote (1441)	2/6/1998 2:07:00 PM
From: Francis Gaskins	Read Replies (1) \| Respond to of 164684

You asked "How likely is it that AMZN could have earnings of $1 billion on revenues of $5 billion in ten years?" Not very likley because their gross margins (alone) are not even 20%.

To: Tom D who wrote (1441)	2/9/1998 11:27:00 PM
From: winam	Read Replies (2) \| Respond to of 164684

Tom, One of the more thoughtful pro-amzn posts have seen. Here are some possible caveats: 1] Bookselling is a declining business, and it will decline faster if the Internet expands faster. There is a sort of no-win bind about selling books on the Internet. If the Internet penetrates world commerce as fast as some Internet optimists predict, than the world market for books will start to decline. The Internet competes with books for leisure time as well as information dissemination. There are a plethora of books now sold which will not exist in the Internet dominated future. So if on-line bookselling becomes, say, 25% of world-wide bookselling in 2008 (a projection I have come to believe to be pretty optimistic) then it is almost certain that worldwide bookselling will be significantly less than 80billion. 2] On the Internet books will be commodities and this will dramatically effect margins. B&N and especially Borders have succeeded in differentiating their products by building these extremely pleasant little oasis within which they sell books. In the land book business each store has a different stock. On the Internet all booksellers will offer the exact same "ambience" and in very short order all booksellers will have pretty much everything, or pretty much the same things, in stock. In fact the B&N site and the Borders site and the Amazon site will be relatively indistinguishable. There will come to be some specialty booksellers that will have some things that the majors dont find profitable to "stock" (however you cut it, it still costs to have a book available on your internet bookstore). The only possible way to distinguish will be price and this may, probably will, lead to the kind of price war that will quickly eliminate any improved margin due to internet commerce efficiencies (which themselves are beginning to appear highly overstated). 3] Despite the slightly shaky finances of B&N and Borders they are fierce competitors with able and proven management. They will not concede the on-line market to amzn. Their name recognition in the larger world probably pretty much balances amzn's lead in the on-line world. Think that the most realistic appraisal will be that ten years from now the three companies will have equal shares of the on-line market. 4] As you know B&N and Borders margin is about 3% of sales. 5] Their combined sales are less than 8% of total world sales which says that in the land book business, where there is a steep entry hedge having to do with bricks and mortar and inventory, the two largest companies own only a fragment of the total business. 6] So lets crunch some numbers. Say that ten years from now the on-line book business is 20% of the 70billion total business (remember if the Internet is growing that fast the book biz is declining) or 14billion dollars. Say that amzn B&N and Borders equally split 50% of that business, each having slightly less than 2.5billion in on-line business. Say that the margin is the current 3%, the efficiencies of on-line commerce balanced by the price pressure true commoditization brings. So amzn will have 75million in earnings in 2008. What multiple might they be selling at? They are in a declining, possibly fragmented commodity business. They have never made the kind of profits that will free them from the financial corset that makes life difficult for B&N and Borders. They have at least two, and possibly more, fierce competititor. It is hard to imagine them getting a multiple of much more than 10. Which gives them a 2008 value of 750million or a 1998 value of about 250million or a per share value of ten to twelve dollars a share in 1998. Sure it is possible they do better, have a higher multiple, a bigger share of the on-line market, maybe even a higher margin. But it is also possible they do much worse. The 14 billion on-line book sales in 2008 seems especially optimistic and the 3% margin also seems unlikely. There is also at least some chance they dont make it at all. Current projections seem to cut it pretty close on their present financing before they turn the corner. It wouldn't take much pricing heat for their competititor to eliminate them before they got started. Seems to me the only way amzn can approach a 4billion value in 2008 (a value that would justify their present 1.4billion) is to sell things other than books. But why amzn? Why would they be a leader in CD's or electronic equipment? They barely have the bucks to keep their head above water selling books. Just my thoughts. Interested in your rebuttal. JS

To: Tom D who wrote (1441)	4/11/1998 8:29:00 PM
From: Glenn D. Rudolph	Read Replies (1) \| Respond to of 164684

So far the computer has not replaced newspapers and books because the latter are so cheap, portable and markable with highlighters. We'll see. But I think there is a subset of investors who have 5 or 10 year or more time horizons. Tom, I just wanted to point out that the newspaper business in the US is suffering badly. There has been a large drop in circulation attrbuted to the Internet. Also, book sales are decreasing at the rate of 2% yearly for the last three years. The computer is replacing newspapers and books but there has not been enough time to replace them entirely yet. Looking 5-10 years out, this is a possibility. Glenn