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

To: Steve Yuan who wrote (31933)	12/31/1998 9:33:00 AM
From: CMon	Read Replies (1) \| Respond to of 164684

Steve: So how do you get from your argument to this valuation? In any event, all the products you mentioned are commodities. If AMZN becomes the dominant seller of all of them, they'll still do it at a tiny margin. They didn't write Hamlet. A business that operates at a small margin is worth a fraction of its revenue. Period. At its $18 billion market cap, AMZN better have $60 billion of revenue next year. If you're a wild optimist and say they'll do $1 billion next year, they're only 60x overvalued. You think they'll do $60 billion in five years? 1) You're crazy. 2) If so, you better discount this valuation back at, say 20%?, and they're still wildly overvalued.

To: Steve Yuan who wrote (31933)	12/31/1998 2:11:00 PM
From: Glenn D. Rudolph	Respond to of 164684

Another important point about AMZN is that people who purchase books usually have sizeable disposable income. This will allow AMZN to sell other things. Using the same infrastructure, AMZN can easily sell CDs, and DVDs. BKS has no way to do that in its traditional stores. BKS does that is our regional super store now. They also sell software. The key is the brand name and marketing expenses. As to the cost of fulfillment, I think the shipping and handling fee is supposed to cover that. I calculate the shipping and handling is not covering that and that gross margins are lower for AMZN due to a higher cost for the books. But I have used AMZN. Also, in normal mail order, the choice of books are very limited and usually does not have the books I want. Electronic mail order has conveniently solved this problem. I agree with this but many people still want instant gratification. As to the competition between BKS and AMZN, it is true that AMZN needs warehouse, but its warehouse does not have to be in a mall. As you know, the key to the price of real estate is location, location and location. Also, AMZN need only one warehouse for a region compared with thousands of stores for BKS. Not exactly... Glenn