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

To: umbro who wrote (12099)	7/30/1998 10:52:00 AM
From: IceShark	Respond to of 164684

Gary, I completely agree with your point that the shareholders are currently footing the bill for exec. compensation and everything else. That's one of things that makes Amazon such a unique stock situation. The general perception is that Amazon is a well-run, fast-growing operation, with a lead on the competition. Many people, when they hear that sort of good news, just assume that Amazon must be profitable -- not so. It is a little more serious than that. Ignoring the transfer of wealth from shareholders to employees, true compensation costs are understated. In the original compensation scheme (which covers nearly all employees as best as I can tell), a significant portion was to be off income statement. Thus true "profitability" was overstated. Now with the stock price at irrational and unsustainable levels, new option grants, following the old scheme, are a worthless form of compensation. This is going to drive up labor costs from here on out, unless AMZN quickly falls back into the low double digits, putting additional pressure on margins and cash drain. It will also have an effect on the rah rah culture of AMZN for new employees since they have no realistic chance of participating in the option windfall resulting from their dedicated work. So two large classes of haves and have-nots which isn't a good formula for labor peace. This issue could also delay/foreclose any stock split decision for quite some time. Regards, DWW