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

To: John May who wrote (10669)	7/17/1998 12:34:00 PM
From: Rob S.	Respond to of 164684

Thanks for the reply. I dispute the use of gross margin for valuation comparison. My point is that Amazon.com has a low and shrinking gross profit and increasing overall expenses. Yahoo!, on the other hand, is profitable. At this rate, Amazon will need to go out for additional debt or equity financing that will impact future earnings. The huge debt they already have impacts future earnings. Let's look at the sales growth number. At first glance this looks fantastic. It is easy to jump to the conclusion that "if they can continue to grow at 449% this company will be worth xxx in five or ten years. The problem with that generous assumption is that while it was easy for the well financed Amazon.com to grow at a 450% clip as a start-up company with sales in the tens of millions, it is becoming increasingly difficult and expensive to continue to grow sales. Recent sales figures are trending toward 60% the previous rate despite hefty spending on advertising and the venture into CDs. Without the rapid growth profits may never be realized. If the pay-back from advertising does not result in incremental profits, then the growth is not sustainable. The house of cards comes falling down, the value of employee stock options becomes worthless. I submit that the "end game" at Amazon.com is to enrich the venture capital firms, founders and investment bankers and string along the young employees that have a gleam in their eyes for future Microsoft-like millions. The result will be that the company creates huge paper wealth and that the venture firms and founders clear out hundreds of millions of profits while the company continues to lose money. It's not what Amazonianuts want to hear but the fact is that the venture firms and Bezo are set up to reap the conceivable profits for the next five to ten years, leaving shareholders and optioned employees with an empty sack.