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: waldo who wrote (25121)	11/9/1998 12:14:00 AM
From: OtherChap	Read Replies (2) \| Respond to of 164684

News: AMZN's junk bond has deadly restrictions.. If they want to do a secondary to repay them, they'll have to do a 3 seperate secondaries at 500 million bucks each because of the percentage restrictions. Stick that in your pipe and smoke it, William. :) Amazon was desperate for this bond offering, which is why the only people who would even think about giving them cash were "investors" who choose to remain offshore, outside of US regulation. **snip****** There are considerable restrictions as to how and if Amazon can convert it's debt to equity. These are bonds trading in the open market. They can't simply be repaid, they must be redeemed. There are strict financial penalties to redeeming the bonds. They basically would have to buy them back from the holders at their accrued value plus a premium. Also, only 35% of the bonds may be redeemed with the proceeds of a secondary offering.

To: waldo who wrote (25121)	11/9/1998 8:03:00 AM
From: Glenn D. Rudolph	Respond to of 164684

From Thestreet.com: " Herb on TheStreet: Can Investors Expect More 'Action' as the SEC Goes After Costco-esque Membership Fees? By Herb Greenberg Senior Columnist 11/9/98 6:15 AM ET MonDayne: Nobody's paying much attention, but: On Friday, after weeks of denying there was an issue, Costco (COST:Nasdaq), after discussions with the Securities and Exchange Commission, said it's changed the way it accounts for its annual memberships. Rather than book the entire membership fee as income in the quarter in which it's received, Costco now must amortize membership fees over the one-year life of the membership. The impact on Costco is relatively small; it will have to take a one-time charge of $118 million. But Costco certainly isn't alone. The SEC is believed to be taking a close look at membership accounting in the wake of concerns about how Cendant's (CD:NYSE) accounting for membership may have been a factor in that company's calamity. Besides Costco, which other public companies charge membership fees and take them in one lump as revenue? Probably more than you realize. Action Performance (ACTN:Nasdaq), for example, has more than 138,000 members who pay anywhere from $19.95 to $34.95 to get access to limited edition cars and other Action merchandise. At an average of around $25, that would amount to roughly $3.4 million -- not a big deal, as long the company's business is robust. Action designs and markets licensed motorsport cothing, collectibles and souvenirs. Action's financial statements don't disclose how the membership fees are booked. Officials didn't return my calls. From the fair and equal department: A recent item here, mainly about a California money manager, questioned whether Amazon.com (AMZN:Nasdaq) was really trading at a premium to Microsoft (MSFT:Nasdaq) based on gross margins. Enter Howard Love, another money manager, who wonders why the column "ignored the other half to any valuation: growth rates. To compare the two enterprises as static, as you know, is nonsensical. "As Buffett has long said, 'Growth and value are joined at the hip.' The growth rates are why he has long viewed Coke (KO:NYSE) and Gillette (G:NYSE) as fair-priced enterprises while the 'pros' have always seen them as overvalued. As static enterprises, he would never have bought them. The real argument around Amazon should be around the growth rate assumptions. "All of the Wall Street models have grossly underestimated the top-line growth rate to date IN EVERY QUARTER. Without making an assumption on growth rate, there's just no way to come up with an accurate metric for the value. I can tell you that my growth rates for the top line are MUCH higher than the Street's and, I believe, much more accurate. I estimate that Amazon's top-line growth rate will be at least 2 times that of Microsoft over the next three years and probably more. On that basis, Amazon's valuation on the gross margin metric is not out of line." And there ya have ... the rest of the story. (Thanks Paul Harvey for the best line in the biz.) Speaking of Amazon: Look for a fight by independent booksellers over Barnes & Noble's (BKS:NYSE) proposed purchase of Ingram Books. "Independent booksellers hate Barnes & Noble with a passion equal to the Sun (SUNW:Nasdaq)/Microsoft hatred," says independent bookseller John Jones. "Look for Baker & Taylor [an Ingram competitor] to pick up market share from Ingram. And if Baker & Taylor executes well, Ingram could end up simply being B&N's supply house." "