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: Mike M who wrote (30580)	12/20/1998 6:58:00 PM
From: Mark Fowler	Respond to of 164684

Momentum, of course, seems to be the only thing that works today....until it doesn't work anymore! << All stocks have their moments, up or down, Price momentum is not the only thing i'm looking at their are others too. For long-term, start with a top down approach and find companies as such: Message 6894098

To: Mike M who wrote (30580)	12/20/1998 9:36:00 PM
From: Glenn D. Rudolph	Respond to of 164684

The Internet Capitalist SG Cowen Internet Research 3 Even beyond this observation, however, Shop The Web has very important profitability implications for AMZN's P&L. Since Amazon neither takes inventory of nor ships and delivers the good, they have very little cost associated with this payment from The Gap. Imagine, if you will, how Amazon's profitability changes if, say even 20-25% of their revenue is derived from Shop The web arrangements. If you believe , like we do, that Amazon's profitability will eventually emerge (with scale) and for those categories in which they take inventory and ship the goods, operating margins could approach 10-15% with time, then what happens if you layer in a revenue stream with margins in the 25-35% range (our extremely rough estimate for the “costs” associated with the bounty revenue received from The Gap, et al)? Well, you get some nice potential operating margins; certainly higher than your typical off-line retailer. The right question, now to ask is, “Why should we believe that The Gap, Eddie Bauer, and the rest of the retailers will partner with Amazon.com for commerce? For this we have a nifty little historical analogy. Recall that when the Internet became a big thing back in 1994/95, the traditional media companies acted like, well, traditional media companies and rebuffed efforts by AOL and others to partner with them to host their content on, say, the AOL service. Disney's thought process, for example, revolved squarely around their belief that, since they were Disney, they could simply put up a Web site and the brand would attract as much traffic and eyeballs as they could handle. Time Warner thought the same thing, opting to go it alone and roll out Pathfinder instead of partnering with an online media aggregator like AOL. Of course, as any student of the Internet space now knows, Disney's early efforts to go it alone failed; Pathfinder is now an odd and distant memory. Fast forward two years and the same thing happened on the commerce side of the Web as it did on the content side. One to two years ago we heard all about how Land's End, The Gap, LL Bean, and the rest were building $10- 15 million transactive Web sites to hawk their wares on the Internet. Now, a few years later, we're having the same Web winter (Ted Leonsis' term, not ours) in the retailing space as we had in the content space. These retailers are realizing that they need to drive revenue to their sites just like traditional media companies realized that they needed to drive eyeballs to their content (after all, content is only as valuable as the number of people that see it). Who are these retailers going to turn to? You got it: Amazon.com. Just like AOL represented the biggest aggregation of online consumers of media (content), Amazon represents the largest aggregation of consumers who transact (solely). So just like traditional media content providers ended up paying AOL and the rest of the portals for carriage on the Web, the brick and mortar retailers of the world are going to pay Amazon for “carriage” on Amazon.com. Whereas AOL sells consumers' eyes and ears, Amazon sells consumers' wallets, an analogy that we think is as fitting as it is exciting for Amazon's top line and bottom line prospects a few years out. Which brings us back to our title: a Web retailer * a commerce portal. Just like AOL's beauty (as an investment) lies within its ability to derive multiple revenue streams (with different profitability) from a “captured” consumer base (this being the definition of “portal”), Amazon's beauty lies within its ability to exploit its commerce portal position. An online retailer simply garners revenue from the sale of its goods; a commerce portal derives