Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Glenn D. Rudolph who wrote (23605)	10/29/1998 8:08:00 AM
From: Alan Newman	Respond to of 164684

I can't remember if this was posted already from Briefing.com: AFTER THE CLOSE WEDNESDAY ****** AMAZON.COM (AMZN) 117 1/16. They lose more and more money each quarter, but hey, it's all an investment, right? After the close Wednesday, Internet book and music retailer Amazon.com (AMZN) reported a pro-forma third quarter loss of $0.49 per share. That rather healthy loss was actually less than the expected loss of $0.57 per share, but it should be noted that estimates had come down recently. Also, the full loss including recently acquired companies was $0.90 per share (see below). At any rate, what does it really matter how much AMZN lost? They have lost more and more money each quarter while the stock has trended higher. The earnings, or rather loss, per share data look like this by quarter starting in the first quarter of 1996: -$0.01, -$0.02, -$0.06, -$0.06, -$0.08, -$0.16, -$0.19, -$0.21, -$0.20, -$0.44, and now -$0.49. Over the same period the stock has soared from under $10 (split adjusted) to $117. The market isn't the only one that ignores the losses. AMZN management likes to argue that marketing expenses are really investments used to stake out market share and increase brand name. That is true for all companies, of course, but for an Internet coming, time is indeed of the essence. On this basis, perhaps investors should question why AMZN didn't lose the full $0.57 that was expected. While the losses mount, though, revenue has increased. Third quarter revenue was up 306% from the year-ago period. That was down from the 679%, 446%, and 315% rates of the past three quarter, but is still obviously healthy. The press release is noteworthy in that it emphasizes the CD (music) side of the business as much as the books. Perhaps books are already losing their panache in the fast world of Internet businesses. How the market reacts to these numbers is uncertain. AMZN remains a trading vehicle for Internet investors as much as a stock trading off company fundamentals. The company isn't going to make a profit for years, and yet has a market capitalization of $5.8 billion, over ten times what the Barnes & Noble (BKS) Internet division is valued at. AMZN is likely to have a very successful business, but the greatest risk is that the market reduces the value of its growth prospects. As Wednesday's Stock Brief showed, there are a lot of Internet companies that have managed to post solid revenue growth, yet seen their stock price slide. One other note that could be a whole comment in itself - the full loss for AMZN was $0.90 per share. That includes the ongoing losses from acquired companies and associated amortization. The $0.49 loss is pro-forma, which excludes an extra $0.41 per share because those weren't part of the company last year. That is a correct definition for pro-forma, but investors should not confuse this with operating expenses. It appears that most of this extra $0.41 per share is indeed from operations. Perhaps AMZN is "investing" as much as they should be.