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

To: KeepItSimple who wrote (36373)	1/24/1999 3:22:00 PM
From: Victor Lazlo	Read Replies (1) \| Respond to of 164684

<< The second anyone actually tries to get away with this, there will be a software 'cookie' hack that will instantly give every user the lowest price. I can guarantee you the first company to try this sort of stunt will be torn apart. >> KIS, AMZN's been doing it. <<This kind of activity would probably be deemed illegal if someone tried it in real-world retailing.>> The airlines have been doing this (price discrimination) for years.

To: KeepItSimple who wrote (36373)	1/24/1999 7:47:00 PM
From: Glenn D. Rudolph	Respond to of 164684

The Internet Capitalist SG Cowen Internet Research 12 All-in, operating expenses grew 23% sequentially against a 40% sequential top line growth rate, suggesting that Yahoo! was able to keep within their earlier operating expense model while clearly over-delivering on the top-line. These productivity levels are all the more impressive in light of the growth in headcount (from 673 to 803, a 19% advance) in the quarter. Once again, we think its imperative for investors to understand the enormity of what has taken place here; sustained, sequential increases in profitability like these are what makes us so bullish on this company's prospects over time and makes it so difficult to accurately determine just how much net income Yahoo! could generate a few years out. With such rapid increases in revenue and margins (a double whammy if we've ever seen one), it's no wonder that the Street has taken Yahoo!'s valuation up as far and as fast as they have this past quarter. With Q4 results like that, it is possible (though we haven't said likely) that many of the most optimistic estimates for profitability are within both reach and reason. Traditional Financial Metrics Delight… Yahoo! has $482 million in cash on the balance sheet, having grown that figure some $50mm in Q4 thanks to nicely positive cash flow. Operating cash flow in the quarter was an amazing $31 million. DSOs are so low it's laughable (this is the 11th consecutive decline); they decline to 30 days from September's 34 days. Deferred revenue on the balance sheet increased some 27% sequentially to $38 million (up from $30 million). Because this deferred revenue number only includes invoiced revenue, our confidence in our revenue estimates going forward is extremely high. Guidance Was Positive; Q/Q Growth In Q1… Though some caution about seasonality made its way into management's remarks (as they have for the last few years after Q4), official guidance was for a sequential increase in revenue, an increase in S&M and R&D in %-of- revenue terms (the latter aggressively), and continued increase in G&A. Though spending was kept in tight check in this quarter, Yahoo! rightly wants to maintain the flexibility to increase any of their expense lines if conditions warrant, a request that seems wholly prudent to us given the upcoming efforts by Disney and NBC in this space. Though we strained to get the management team to suggest that they are approaching a size that some marketing spending efficiencies could help bring that 40%+ S&M number (as % of revenue) down to lower levels, they believe (as we do) that the launch of Go.com (Disney/Infoseek) and spending on Snap! (NBC/CNET) could increase the dollars necessary to maintain Yahoo!'s brand with the 30mm+ new users expected to come onto the Web in 1999. Op Margin Guidance Remains 30-36%… Once again, management suggested that their long term operating margin guidance of 30- 36% remains intact until 2000. Our model reflects this guidance because we believe that the single biggest wildcard in the model is sales and marketing; we are hard pressed to believe that Disney and NBC can enter this space, spend heavily on branding and traffic acquisition and not have some impact the media and marketing costs of the other portal players. For now, we're giving Yahoo! the space it needs to spend these monies, though we add emphatically that once real scale is achieved and the power of increasing returns start to significantly impact Yahoo!, we could see much lower S&M spending by Yahoo! …But The Market Already Understands That. Yahoo!'s Potential Margins Are Much Higher