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

To: put2rich who wrote (11264)	7/22/1998 4:31:00 PM
From: llamaphlegm	Respond to of 164684

Hedging a massive short position ahead of earnings perhaps??? from TMF: Domino's is actually a very interesting case study with regard to Amazon. By the mid-80s, Domino's was on top of the world. They had no serious competition in most markets, new franchises were booming everywhere. They were so profitable and arrogant that in some markets, they didn't even deliver sodas. Then something happened--the sleeping giant awoke--Pizza Hut. Pizza Hut delivery didn't actually take the lion's share of Domino's business, I would surmise, but it exposed a fatal weakness in their strategy. Domino's response was basically, "we're not worried because people like our pizza better. Wrong (although I do)! Then several other competitors undercut Domino's prices. By the early 90s, the bottom of the market was claimed by the competition, and the top was a tough place to be. New franchises were nowhere near as lucrative, thus managers were disillusioned. When I go in a Domino's on a Fri. night now, it's sad because they are only doing about a fourth of what they used to. Relevance for Amazon? Borders and Barnes are just like Pizza Hut. If Amazon tries to increase prices to improve margins, they lose business. Their only hope (and what Domino's should have done) is to undercut them. But Domino's was running 10-15% net margins before PH came along . . . Domino's had a twenty year head start on PH with regard to delivery. The advantage disappeared in maybe two years. You're right, Tom Monaghan is a billionaire; many franchisees are millionaires, but these were mainly the ones who got to the party early. Replace "franchisees" with "AMZN shareholders" and think about it.