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

To: SouthFloridaGuy who wrote (21350)	10/13/1998 5:35:00 AM
From: John May	Respond to of 164684

Quotes from a recent article in Red Herring. <<B&N's online unit reported paltry sales of $22 million for the six months ended August 1.>> Amazon's sales were $203 for same 6-month period. <<From a valuation stand point, Bertelsmann's $200 million investment in Barnesandnoble.com values the company's online unit at around $400 million. Internet darling Amazon.com, on the other hand, sports a market cap of around $4.5 billion. Amazon.com currently also trades at around an expensive 17 times sales.>> This is deceiving. The "17 times sales" uses AMZN's last 12-months sales. If you annualize the 6 months sales for both companies (we don't know what BKS online sales were for the last year) then divide by the $400 million value for BKS and the $4.5 billion market cap for Amazon, price times sales computes to: BKS $400 million / $ 44 million = 9.09 times sales AMZN $4.5 billion / $406 million = 11.08 times sales So the companies are fairly equally valued in these terms. Then consider: <<Clearly, Barnesandnoble.com still has substantial ground to make up in the online bookseller market. Estimates peg Amazon.com's current market share online at between 65 percent and 80 percent.>> Crunching these numbers reveals that BKS market share online ranges from 7% to 9% -- about one tenth AMZN's. In light of this, AMZN should sell at a premium over BKS, maybe more than the premium currently in the stock.