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To: Steve Robinett who wrote (39)	2/2/1999 12:40:00 PM
From: MaryinRed	Read Replies (1) \| Respond to of 419

Steve.... eyeballs.....eyeballs....eyeballs... think "ad revenues"....just like tv..... they don't have to make the money off the sale...but off the eyeballs coming there to get a bargain.... Maybe it is because I am "in marketing"...that I see this? or what? smiles...mary

To: Steve Robinett who wrote (39)	2/2/1999 12:48:00 PM
From: Joe E.	Read Replies (2) \| Respond to of 419

Steve: Well, on Amazon's conference call the CFO said they had a positive cash flow since inception (I presume she meant from operations). Because they get paid within 30 days by the credit card companies and don't pay their suppliers for 60 days or whatever Amazon, has, supposedly a net 30-33 days to keep the customers cash. So, in this sense if they can build sales more quickly than they can spend the money, they do throw off cash. It is a Ponzi scheme, in a way, of course, because if they suddenly stopped they would have to pay all of their creditors and out would go a huge amount of cash. BUT ... Amazon looks much better from a cash flow perspective than from an earnings perspective. Most growth companies must invest in bricks and mortar to grow, so their capital needs exceed their cash flow generation while they are growing quickly. Most retailers and manufacturers hold product inventory long enough to, on average, have to pay for it before they sell it. Amazon and Dell have a different (better) model, in that they do not need as much capital to expand plus they don't invest in as much inventory. Since Amazon has just borrowed $1.25 billion and talked about growing their distribution network, it is possible that their model is deteriorating somewhat and they will rely more on bricks and mortar and inventory.

To: Steve Robinett who wrote (39)	2/2/1999 2:14:00 PM
From: Reginald Middleton	Respond to of 419

The Onsale model is an advertising model. Suppose I opened a site that sold 1 dollar bills for 92 cents. I had 10 million in venture capital. I put 3 million in in reserve for inventory (making a float), 2 million in marketing to draw traffic (there is very little expense in infrastructure and technology), and made a 12 cent revenue stream on every visitor due to long term advertising contracts. What initialy appeared to be selling at a lost is actually producing a slightly above average margin (for the standard industrials, at least). The positives of this model is that it can be replicated across almost avery industry, a virtual boon to the consumer. I am even joining in by starting an investment club on my web site that offers real risk management techniques and hardcore fundamental analysis for less than one third of what mutual funds charge (as if mutual funds offered these services to individuals). The benefits of the efficiencies in the new economy and the web. The problem with this model is that it is flimsy due to the fact that those margins are slim for the technology industry and will get slimmer year after year. What Onsale is doing is commoditizing a commodity business. They will succeed until others come in with more captial to drag down the margins in a race for market share. This tit for tat will not stop until someone offers something of value that is difficult to reproduce. Thus far, YHOO, AMZN, eBay, Onsale and the rest can fall victim to big brand names and large amounts of capital. the fact that they are being bid up so high means that when enough money is invested, somebody is going to get hurt bad, very bad. This is why cos. like MSFT and AOL stand above the crowd of many internet stocks. They have real paying customers, real technology (if NSCP goes through) and real business models. RCM rcmfinancial.com