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

To: Islander who wrote (9138)	7/7/1998 2:22:00 AM
From: Dwight E. Karlsen	Read Replies (2) \| Respond to of 164684

I have a few puts, yes. 4 to be exact. yes they're practically worthless. I've read and discarded as hype the BA Robbie Stephens report. I'm a fundamental bear on Amazon's business model, period. Does BA Robbie Stephens realize that even if an additional 10 million people spend $20 on books at Amazon in one year, that's only $200 million dollars? Does that justify a market cap of $6.9 Billion?? Do you think that everyone that rode this thing up are simply going to hang around long waiting for that additional $200 million in sales? Does BA Robbie Stephens realize how much it's costing Amazon for that banner link ad on Yahoo's Finance page??? $10 million for that banner, good for a limited time. Cost of bandwidth, cost of labor to ship a book? Cost of upgrading and maintaining a fleet of Sun servers? Cost of buying and maintaining electronic security? Cost of insurance on the whole operation, which Amazon currently doesn't carry? Share dilution, as Amazon insiders begin getting lucrative option packages just to keep them on board? Margins on books? How many books have you bought lately? Is America going to have time to read and click on all those web banners? Not only that, but I simply don't like online bookstores. They're lame compared to a B&N superstore. As I've said before, the only time I've ordered a book off the internet was when I couldn't find a specific title in the local B&N superstore. I know this is boring fundamental stuff, but it's what I believe. As a last and final effort, I ask again: If Amazon has "captured" the online market for books, then where oh where is future explosive growth going to come from, and how much growth at all is left, other than boring incremental growth through increased (expensive) advertising, etc? The gravy growth is over for Amazon, in terms of sales, IMO. The stock, on the other hand, will do what the masses think it will, for now. I wonder how people will react to a week's worth of down days, while Amazon insiders dump as much as the company will allow them? Be my guest though, and go long. Just make sure you're not the last sucker in.

To: Islander who wrote (9138)	7/7/1998 2:35:00 AM
From: umbro	Respond to of 164684

Islander, Do you believe 10 or 20 million people might buy a book or a CD or something else from Amazon.com by 2001? If I got the figures correctly from the current 10Q, AMZN had 2 mil. customers, and made about 200 mil. in sales. That's about $100 (gross) sales/customer. Using that number, then 20 mil. customers (a big number), would give you 2 Bil. in sales. Right now, AMZN trades at 6B in market cap., so we'll call it fairly valued at 3x sales, if: AMZN's stock price stays where it is for the next five years (an ave. 60% growth rate in sales gets AMZN to 2B in 5 years). Currently, AMZN nets 20% (approx) of sales as "gross profit". This is the money left after paying for the books that are sold. That figure would give a hypothetical 400 mil. in gross profit in 2003. From that, subtract about 50 mil. to pay off the first junk bond interest payment, so that leaves 350 mil. As of Mar-98, sales/marketing, R&D, and G&A totaled 30 mil. in the quarter, or $120 mil. annually. Assuming only a 10% increase in these costs per year, they'd be about 1.6x higher thnn now, in 5 years, or 200 mil. That leaves 150 mil. in earnings. or $2.75/shr. At today's price of $140, and given this optimistic scenario ... AMZN would be trading at 50 times earnings _if_ the price stays the same as today ($140). Doesn't leave a lot of room for growth.

To: Islander who wrote (9138)	7/7/1998 2:53:00 AM
From: umbro	Read Replies (1) \| Respond to of 164684

Islander, Do you believe 10 or 20 million people might buy a book or a CD or something else from Amazon.com by 2001? In short, no. To go from 2 to 20 mil. customers is a better than 100% growth rate (2x) per year for the next 3 years. That's tough to believe, when you figure 20 mil. customers is 7% of the US population (1 out of 14), and must be close to the total number of online users today in the US that spend money via the net, on anything. To believe the premise above, I'd have to believe that 1 out 3 internet users will be ordering from Amazon in the year 2001. Someone help me with the math/demographics, here.