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

To: llamaphlegm who wrote (11544)	7/23/1998 2:28:00 PM
From: UFGator93	Read Replies (3) \| Respond to of 164684

From briefing.com: CNET, Inc. (CNWK) 71 +6 7/8. Wall Street is falling down on the job while C/Net, Amazon.com, and Excite pull fast ones with their earnings reports. CNWK reported earnings after the close yesterday and it was widely reported that they had "blowout" numbers, reporting a profit of $0.02 per share compared to an expected loss of $0.21. We fell for it too. But wait,in the 19th paragraph of the press release, CNET notes that they had a one-time gain from a sale in a stake in another company. That came to $0.26 per share, but you have to figure that out yourself. There was no breakdown in the financial table. Hey, aren't one-time gains supposed to be excluded from earnings comparisons? Perhaps not when it helps the stock. Exclude the one-time gain and CNWK missed the earnings estimates. Reuters wrote a story to this effect but we have only seen a couple of Wall Street firms mention it. Wall Street is absent on the analysis of AMZN as well. After the close yesterday, AMZN reported a loss of $0.33 per share on a "pro-forma" basis, but $0.44 using GAAP. GAAP stands for generally accepted accounting principles, which tells us exactly what AMZN earned. Apparently, "accepted" means only when they help the stock price. Pro-forma means that AMZN wants to exclude amortization of assets that weren't on the books last year. In essence, this means that even though these are GAAP costs, and are included in every Fortune 500 companies books, AMZN wants to exclude them because they weren't there last year! Hey, why not exclude the salaries of all employees that are new since last year? Why not exclude all new marketing costs? Wall Street should recognize that the current quarter numbers are best reflected by the GAAP numbers that AMZN reported, not the $0.33 per share "pro-forma" loss. Perhaps these companies are just following the lead of Excite (XCIT), which last week excluded from "pro-forma" earnings a marketing expense, simply because it is one-time. Only because of that did they beat their numbers, and we saw only one Wall Street firm complain. Accounting 101 says the costs of that marketing deal with Netscape should be amortized over the period in which the benefits accrue. XCIT says otherwise, and Wall Street meekly concurs. CNWK gets to include a one-time gain, but XCIT excludes marketing costs, and AMZN excludes amortization costs simply because they weren't there last year. Frankly, Wall Street needs to step up and restore credibility to the way in which companies report "earnings."

To: llamaphlegm who wrote (11544)	7/23/1998 2:43:00 PM
From: Doug Fir	Read Replies (2) \| Respond to of 164684

Customer accounts? "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." This is one element of the hype I've never been able to swallow. I don't care what K-mart thinks, if I pay with a credit card that doesn't make me an "account". A continuous relationship with a implied measure of difficulty in changing or ending it can be construed as an "account", but a purchase is just a transaction. I can't wait for McDonald's to claim "Billions and billions of customer accounts"

To: llamaphlegm who wrote (11544)	7/23/1998 4:10:00 PM
From: Oeconomicus	Read Replies (3) \| Respond to of 164684

Thanks, LP. Until I got to the last paragraph, though, it seemed like routine Foolish hype. Then this: 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 What a load of crap! That $340 million is entirely borrowed money. Operations burn cash. It's not a war chest. It's a respirator. It keeps them alive until, they hope, they can breathe on their own one day. And, if you are going to count debt capacity in comparing competitive strengths, BKS has $491 million of undrawn availability under its bank lines not to mention $11 million in cash and operations that generated $22 million in EBITDA last quarter (the slowest quarter of the year). Who dwarfs whom? One is burning borrowed money to stay alive and the other has much greater amounts available to it, which it hasn't needed to use, plus cash flow with which to repay it if they ever do borrow. Bob

To: llamaphlegm who wrote (11544)	7/24/1998 11:23:00 AM
From: Rob S.	Read Replies (2) \| Respond to of 164684

I think a lot of brokerages and amazon speculators will be putting in a "last ditch" effort to pump the stock up so that they can unload without driving the price down much. Amazon.com's sales momentum has been dropping fast recently despite the favorable comparisons to year ago numbers. If you look at sequential, qtr. to qtr. comparisons, that becomes much clearer. As we move forward, the percentage growth numbers will become harder to maintain and will drop more rapidly. As big as the internet is and as fast as it is growing, Amazon.com is reaching a point where they are saturating the market and meeting with serious competition for the first time. Here is some of the out-of-step thinking of H & Q's Jamie and other's who call themselves anals (is he a boy or a girl? No one will ever know): 1] Assertion; Amazon.com has a clear technical advantage due to in-house developed e-commerce and client filtering and active database push software systems. Rebuttal: Amazon.com HAD a clear technical advantage when they were forced to develop their own back-end and web software systems. That advantage has evaporated and is now just boils down to implementation. Amazon itself has begun using third party software systems for primary filtering, content/page push, and reporting capabilities - the leading edge functions in e-commerce today. Borders, Barnes & Noble or anyone else can buy THE SAME or similar software from THE SAME or similar companies. Maybe the hardest part of doing this is deciding which of the many offerings is best suited to the companies particular server systems and web development environments. 2] Assertion: Amazon.com has developed brand recognition and momentum that competitors can not catch up with. Rebuttal: Jamie must have snoozed or covered his/her ears and refused to listen to the findings of many internet usage studies and explanations of Amazon.com's CEO; Amazon.com has developed it's business by concentrating on the customer and delivering a superior web experience. That boils down to useful search engine capability, well indexed references to similar offerings, highly responsive database and page generation server systems (fast response) and clean and responsive page content. Amazon was maybe the best early adopter of active database server technology, but, as stated above, that differentiation has evaporated and now amounts to implementation. Visit Amazon's competitors and see that their offerings have closed the gap. 3] Assertion: Amazon.com has a market momentum leadership position that others cannot duplicate. Rebuttal: Amazon.com does have market share leadership but momentum has already started to falter. Barnes & Noble and Borders have just put in place the technical and page authoring capability to be competitive. Now that the systems stuff is in place, the ad campaign has begun to be effective. It takes both of these elements to amount to serious competition. 4] Assertion: Amazon.com has over 60,000 associate sites that it pays commissions to that are ardent supporters of Amazon's business and who create widespread grass-roots visibility. Rebuttal: This is one of Amazon's greatest stengths and differentiations. A great use of the power of the internet. However, Amazon.com has no proprietary lock on this method. Barnes & Noble now offers a similar Associates program. Other competitors can offer as good or better programs to compete against Amazon.com and other big companies. 5] Basic Assumption: Internet e-tailing will become dominated by just a few leading companies, such as Amazon.com. They will have a great advantage over their rivals and will control market shares similar to software giants or broadcast media giants. Rebuttal: This argument is flawed. The internet is not similar to broadcast technologies. It is inherently a multi-point to multi-point technology with free exchange of content being the most common denominator. Broadcast technology is a point to multi-point one-way technology with pay for ad view being the most common denominator. Attempts to turn the inet into a broadcast media have failed to draw substantial interest even though huge sums of money have been thrown at the effort by MS/NBC, Netscape and others. Turning the internet into the boob tube is truly ANAL thinking (as in Anal. . retentive . .ysts). Jamie didn't listen to Bezo's wise comments during the conference call: Amazon sees a proliferation of portals and competition developing. Bezo still fails to see the entire impact of his own perceptions and reasoning: mass ad-push marketing on the inet should not be the primary focus. The associates program should take center stage. It offers far more leverage and maneuvering room to creative marketing. Internet e-commerce will be huge. The biggest portion will be business-to-business. It will not be dominated by one or a dozen large companies. ------ Poor Jamie and other anals will get with the program one of these days, give credit where its due and gain an understanding for where the internet and Amazon.com are headed. The results are starting to make that clear and it will become very apparent (even poor Jamie won't be able to ignore it) in the next few quarters. Amazon.com will remain a leader in early e-tailing momentum but will be joined by several worthy competitors at the big company level in what will increasingly become a price competitive, low margin business. Amazon.com will also be met with a growing ground swell of smaller competitors who are now able to take advantage of avialable web tools to deliver similar or superior web experience, specialized content, and personal or community service.