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

To: JimieA who wrote (7936)	6/28/1998 11:15:00 PM
From: Michael Norton	Respond to of 164687

Jim, talking about financials-a news story tonight on DJ is about a NTKI shareholder that has filed suit alleging misleading financial statements. I will try to post story. Regards, Michael

To: JimieA who wrote (7936)	6/29/1998 8:10:00 AM
From: Glenn D. Rudolph	Read Replies (2) \| Respond to of 164687

Can't you just admit that the AMZN etail model is just more efficient then the normal Brick and mortar retail. Jim, I cannot admit this because it is incorrect but is sold as hype by either Amazon.con management or analysts. I will explain. I first will use the jewelry business (retail of course) as an example. There are small retailers that do not have the capital or enough gross sales to permit them to buy directly from the manufacturer. Those retailers buy from "jobbers" who hold inventory from various manufacturers. These jobbers sell the jewelry product with a 10%-14% margin which makes the cost of goods sold to the retailer 10-14% higher than their competitors that carry their own inventory bought directly from the manufacturer. Most jobbers have gone out of business because most undercapitalized jewelers could not compete on price in the market place when they pay 10% more for their merchandise. Amazon.con buys the majority of their book via Ingrams and another jobber for books I believe. The book business is a lower margin business than the jewelry business so the the jobbers in the book business work with a 6-8% margin. This means that Amazon.con's cost of good sold exceeds that of BKS or BGP by 6-8%. Let's say Amazon.con gets lucky and gets to a billion dollars gross sales before BGP and BKS bankrupts them. If the retail price of the books from AMZN, BGP and BKS are about the same, AMZN will have a 6-8% less gross profit. The typical cost of goods sold in the book business for a billion dollars gross sales is $750 million. However, AMZN's cost of goods sold will be $817.5 million. Using the present business model, this comparison can never improve. The jobber is not going to inventory books for AMZN for nothing. I may not know retail, but I can read a financial statement. The cash on hand minus current short term liabilities and debt as of March 31, 1998 was about $40 million if I recall. I would have to look that up to make sure I am correct. Not willing to do that at the moment. The burn rate of Amazon.s cash is such that all equity in the company would be completely gone by mid June of 98. Look at posts on this thread by others about two months ago. The junk bond offering brought in a gross of $325 million and about $25 million of that when to the firm that handled the offering. Then $75 million when to pay off the bank loan. That leaves $225 million with a long term debt of about $500 million. If analysts's losses projections are correct, Amazon will lose about $85 million in 1998 and another $50 million in 1999. This will leave $90 million going into the year 2000 still without earnings in site and a debt of $500 million. Competition will have increased and the cost of advertising on the net will definitely have increased. Now what? Glenn

To: JimieA who wrote (7936)	6/29/1998 8:38:00 AM
From: Oeconomicus	Read Replies (1) \| Respond to of 164687

I may not know retail, but I can read a financial statement. Can you? AMZN had at 3/31/98 $117M in cash and only $77M in debt. That tells me that about $40M is still available from the IPO. At 3/31/98, AMZN had about $117mil of cash and short-term investments and $77mil of long-term debt, correct, but that hardly makes a complete picture. They also had $48mil of current liabilities, mostly accounts payable. In fact,total current assets of $133mil less current liabilities and long-term debt of $125mil leaves only $8mil of "net current assets" or, in other words, what's left of the IPO proceeds. Considering that they lost $9.3mil last Q, are expected to lose even more this Q, and depreciation is a minimal contributor to those losses, I'd say those IPO proceeds are completely burned by now. Now they are burning debt proceeds. Being able to read financials, Jim, is great, but if all you read is the Cliff's Notes, you miss out on so much. Bob