8. Other Accounting Games - Quality of Earnings
* If you deduct the goodwill ($52mil), tangible net worth is negative $13 million. And that's assuming that the $5.4mil they added to "Deferred charges" and the $9.2mil added to "Prepaid expenses and other" have some tangible value and should not have been expensed. Does their new loan agreement have a minimum tangible net worth covenant?
* Ignoring non-operating write-offs even though they keep coming along every year regular as clockwork. But have you ever seen reported "pro forma" EPS that excludes goodwill amortization.
* Prepaid expenses, deferred charges & Goodwill are all up. Perhaps massaging profit and loss numbers on the income statement
* AMZN wants to provide, "for informational purposes" pro forma earnings (losses) w/o new company expense; but purposely chooses not to inform what pro forma revenues would have been w/o new companies.
* Cash Burn. Cash on hand, less accounts payable, less long term debt has gone from
plus 15.8 mill to minus 39.8 million since December 31, 1997. this is a net cash burn of
55 million.
* Page Views. Seek reports that daily page views fell to 20.3 million in June from 22.1 million in March
6. Questions We'd love to hear AMZN answer.
1. What were the revenues from music sales?
2. What were the revenues from associate sites?
3. Why doesn't AMZN take ads on their site?
4. What's happening with those 3 acquisitions?
5. Exactly how much stock in addition to the $55 million cash was exchanged for the companies?
6. Why are inventories increasing faster than revenues?
7. How does your business differ from LL Bean's?
7. Just for fun & some great links to articles & humor
* A brief history of manias ...
THE MANIA PLACE & TIME RUN-UP MONTHS DECLINE
Tulip Bulbs Holland 1634-37 5900% 36 -93%
Mississippi Shares France 1719-20 6200% 13 -99%
South Seas Shares Britain 1719-20 1000% 8 -84%
American Stocks USA 1921-29 497% 95 -87%
Mexican Stocks Mexico 1978-81 785% 30 -73%
Silver USA 1979-82 710% 12 -88%
Hong Kong Stocks H.K. 1970-74 1200% 28 -92%
Taiwan Stocks Taiwan 1986-90 1168% 40 -80%
Japanese Stocks Japan 1965-89 3720% 288 -63%
American Stocks USA 1982-?? 1111% 175 ?
Amazon.com USA 1997-?? 750% 16 ?
[ source tice.com, dated Feb. 20, 1998 ]
And the definitive tulip mania page:
mintox.org
from "Extraordinary Popular Delusions and the Madness of Crowds"
by Charles Mackay, LL.D. (1841)
* Subject: WWWorthless
That's the title of a feature article in the latest New York Magazine. I don't know where or if it's online, but it's a great read.
Title Caption:
"The market loves the likes of Yahoo and Excite because their brilliant brands have achieved early dominance. Never mind that brilliant young brands almost always tank."
"Investors who tried to get in on the ground floor of the auto industry would have found themselves buying Pierce-Arrow, Premier, and Pope-Tribune, all of which were out of business by the mid-twenties."
"The ironic thing is that we're being simultaneously told that it's still early and that the
major players are so powerful that it would take unimaginable large investments to knock them off their perches. But both things can't be true."
* Accuracy & relevance of Web hits data
If I walk into Nordstroms but walk out without buying anything why doesn't Wall Street
reward Nordstroms just for my visit?
* INTERNET HITS & MISSES
Measures of Advertising Effectiveness Lack Accuracy
[Marshall School of Business, USC]
marshall.usc.edu
Advertisers beware! Companies advertising on the World
Wide Web currently have no accurate way of measuring who, or
even how many people, see their ads, a University of
Southern California study shows.
Researchers at USC's Marshall School of Business have found
that today's methods for determining the number of "hits" an
Internet ad receives can be wildly inaccurate.
The researchers studied thousands of hits on five major
websites (news, education and entertainment sites and two
information databases) and tabulated those hits on the basis
of Internet protocol addresses alone. They then tabulated
the hits more accurately by imposing mandatory log-ins and
other identification methods on the same visitors to the
sites -- measures that most websites are reluctant to use
for fear of alienating their visitors. The resulting
disparities were striking.
Using Internet protocol addresses alone as a means of
identifying website hits led to a 39% underestimation of
visits, a 64% overestimation of the number of pages seen by
each visitor and a 79% overestimation of the time spent on
each visit, the researchers report in "Is Internet
Advertising Ready for Prime Time?" -- an article appearing
in the current issue of the Journal of Advertising Research.
"Accurate methods of measuring effectiveness must be devised
if the web is to compete as an advertising medium," says
study co-author Fred S. Zufryden, Ph.D., holder of the
Marshall School's Ernest Hahn Term Professorship in
Marketing. "Measurement will become increasingly critical as
more mass-market advertisers join the medium."
For more information, please call Diana Lundin, Media
Representitive, at 213.740.0188
* Great artwork - you really must see these.
Message 5295246
Valuation & Reality Check:
* As far back as May 18th (with a stock price 1/3 of its recent high) in an article in Forbes by David Dremen in which he places AMZN as number one on his list of overvalued stocks?
forbes.com click on the May 18th issue and read the article entitle
"It's tulip time on Wall Street "
Here is an excerpt about AMZN:
"The magnitude of the overvaluation, using a
standard earnings discount model (which
discounts all future earnings to the present time to
determine a stock's value), is staggering. For
individual stocks it is far worse. Amazon.com, for
example, trades at 87-1,745 times 1999
earnings estimates. Using a 10% discount rate on
future earnings, it has a present market value of
$3.46 a share; using the 15% discount rate, the
value drops to $1.51. "
* Data and telecommunications equipment makers. Richard Woo, networking analyst at Thomson Kerhaghan & Co., . "Many of these Internet companies aren't even selling technology, they're
selling things like books. Anybody can sell books!" Woo said. "There's reality and then there's just hype."
cbs.marketwatch.com.
* AMZN's market cap exceeds that of:
Bay Networks
CIENA Corp
Whirlpool Corp
Dow Jones
Tyson Foods
Maytag Corporation
General Dynamics
UAL ( United Airlines)
Rubbermaid Inc.
Sunbeam Corp.
Sanyo Electric
Hasbro
Hughes Electronic
Humana Inc.
Office Depot
Nordstroms
Firstar Corp
Revlon
Starbucks
Tandy
Black & Decker
B.F. Goodrich
Sonoco
Best Buy
* From Herb Greenberg on the TheStreet.com: "And these Internet tidbits: Amazon.com has a market value of $6.1 billion. That assumes its future cash flow -- that is,its pretax profit -- will be $6 billion. So, whaddaya think theretained earnings, or all of the money ever made and kept, by Barnes & Noble (BKS:NYSE) equals? One billion? Two billion? Try $59 million. Yeah, Amazon has a no-bricks-and-mortar advantage. But that's still a big gap -- taking taxes into consideration. "
thestreet.com.
* Do these guys know something that we do not???
1. BAKER & TAYLOR INC, A SHAREHOLDER filed to sell 350,000 shares.
July 1998. How did they get a hold of 100,000 shares of AMZN?
2. Barksdale takes Amazon Profits
July 9, 1998. Netscape Communications chief executive Jim Barksdale has filed to sell 2,558 shares of his Amazon.com stock, worth nearly $270,000 at current prices, according to a regulatory filing.
Article Links
amzn articles
nytimes.com
Message 5291784
Message 5291739
cbs.marketwatch.com
archives.nytimes.com;
interactive.wsj.com
bwarchive.businessweek.com
cnnfn.com
archives.nytimes.com;
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Message 5315253
Message 5315529
Message 5315529
Message 5316452
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mail.yahoo.com
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boards.fool.com
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Message 5332467
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Message 5335765 |
