Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Alan Newman who wrote (11543)	7/23/1998 2:25:00 PM
From: llamaphlegm	Read Replies (4) \| Respond to of 164684

IMHO this borders on the sleazy. LP FOOL PLATE SPECIAL An Investment Opinion by Louis Corrigan Amazon Delivers Throw in a little bit of actual news, and investors in online book and CD retailer Amazon.com (Nasdaq: AMZN) end up looking paralyzed with confusion. It's hardly surprising given that the second quarter earnings announced after the close yesterday were predictably better than expected, but not stunning enough for other investors to figure this company is now worth more than $6.7 billion. So the stock stutter-stepped higher to $138 1/2 at the start of trading only to fall back to $132 1/4, down $1 3/4 at midday. Still, Amazon.com's numbers were terrific. Revenues rose to $116 million, up 316% over the year-ago period. More significant, they rose 33% over first quarter sales, which were also up 32% over December period sales. On a pro forma basis, excluding $5.4 million in goodwill and amortization expenses from three recent acquisitions, the leading online retailer reported a net loss of $15.8 million, or $0.33 a share, versus a loss of $6.7 million, or $0.16 a year ago. That number blew away the analyst consensus estimate calling for a loss of $0.43 per share. Including the charges, the loss was $21.2 million, or $0.44 per share. Gross margins rose slightly to 22.6% from 22.1% in the first quarter. The company also boosted ad spending significantly, from $19.5 million (22.3% of sales) in the first quarter to $26.5 million (22.8% of sales) in the June period. It's trying to fend off competitors, especially Barnes & Noble (NYSE: BKS), which has launched an aggressive ad campaign for barnesandnoble.com. The most compelling news in Amazon's report yesterday was that the company added a better-than-expected 880,000 new customers in the period (on top of a 750,000 customer account increase in the first quarter). That raised its cumulative total to 3.14 million accounts. Equally important, a whopping 63% of sales came from repeat purchasers. That's up from 60% in the first quarter and suggests that this commodity retailer continues to instill tremendous customer loyalty, though it's not clear what percent of the customer base actually accounts for those repeat purchases. For comparison, N2K (Nasdaq: NTKI) yesterday reported that sales rose 40% over the first quarter to $10 million as the online music retailer added 130,000 customers to bring its total to 352,000. Its marketing expenses were $10.7 million during the period, or 107% of sales. Meanwhile, CDNow (Nasdaq: CDNW), which also reported yesterday, grew revenues by just 16% during the quarter while adding 137,000 customers to bring its base to 569,000. It spent $9 million on marketing, or 77% of sales. Repeat purchasers accounted for 52% of N2K sales during the quarter and 58% of CDNow's. These numbers suggest that Amazon.com is demonstrably whooping some of its top competitors in growth and loyalty metrics even as they work from a smaller base and continue to grow rapidly. Given that Amazon.com is sitting on a $340 million war chest that dwarfs the current resources of all of its major rivals, including Barnes & Noble and Borders (NYSE: BGP), the company can continue spending heavily on marketing for years to come in order to gain market share. Even so, the stock trades at 14.4 times run-rate sales, a daunting price premium.