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Microcap & Penny Stocks : TSIG.com TIGI (formerly TSIG) -- Ignore unavailable to you. Want to Upgrade?

To: Dixie7777 who wrote (3256)	8/5/1998 11:38:00 PM
From: Lane Hall-Witt	Read Replies (1) \| Respond to of 44908

Dixie, You're right on the money in pointing this out. Part of the "genius" behind Amazon's business model is that it is able to charge customers right up front, send their fulfillment order in to Ingram's, and then sit on their customers' money for 30-60 days before settling their payables. They're able to use those payments as a sort of "float" for one or two months at a time. (And, as their purchasing power grows with their size, I guess they're now trying to negotiate 90-day terms of payment. Wow!) This concept of "float" is why Warren Buffett keeps buying insurance companies: it's capital available free of charge. As you note, Dixie, the Card brings in cash that goes right into the TSIG float. And the margins are great on the thing: in the Piercy interview, I think it was, I read that they'll make $6-7 per Card that's sold directly and $2-3 per Card that's sold through a distributor. Sell enough of these and, like you say, it's the equivalent of a PP. TSIG has the Card and the potential 30- to 60-day delay in payables. I'm not sure what their terms of payment are with Valley Media; I should have asked. But they'll almost certainly get to sit on customer's payments for at least some interval before paying off their fulfillment bills. A shrewd company can do a lot with money that lingers in the system a month or two.