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

To: Bill Harmond who wrote (38503)	2/7/1999
From: BGR	Read Replies (2) \| Respond to of 164684

<OT> Thread, Does anybody know whether AMZN has a Web site where I can order NTSC/PAL (not VHS) videos (to be send as gifts to India where the VHS format is not used)? BTW, AMZN needs to update it's video collection. Not a match for it's book collection. -Apratim.

To: Bill Harmond who wrote (38503)	2/7/1999 12:15:00 AM
From: KeepItSimple	Read Replies (4) \| Respond to of 164684

>like eBay is really worth just 16x this year's earnings? At 16x i'm being generous. Their marketshare will be eaten alive. I dont suppose I'll get the satisfaction of seeing you post when you sell, but I can guess it'll be around 100 or so. Too bad to see that nest egg of yours that was written up in the media is going quickly down the toilet.

To: Bill Harmond who wrote (38503)	2/7/1999 11:10:00 AM
From: Glenn D. Rudolph	Respond to of 164684

10 heavier than the pre-holiday (that is, pre-Thanksgiving) period. Despite the very positive long term implications for Amazon here, this is the first real data point that investors have received that suggests that the December quarter Web retailing trend was not secular (that is, seasonal), but rather structural, and that, perhaps, Web retailing may sustain itself at ever greater rates than any of the most ardent bulls had believed. We'll wait to see other data points from other companies, but for now, Internet investors should take note at the potentially huge implications that such a trend could have. Thanks not only to the great December quarter, but also to the very real likelihood that the March quarter is going to be strong (and sequentially higher), we are increasing our revenue estimates substantially. We are going from $975 million in 1999 to $1.3 billion (up $341 million or 35%) and from $1.4 billion in 2000 to $1.9 billion (up $494 million or 35%). On the earnings front, we're heeding the company's call on their investment strategy and lowering earnings a good bit thanks to the company's plan to spend even more in the face of this phenomenal top-line growth. Major investments in distribution centers (like the one recent addition in Nevada which impact S&M), as well as increased spending on new product offerings and better functionality (R&D) are bring our 1999 EPS numbers down from ($0.52) to ($0.87) Now before we start to hear the shorts cry out that Amazon will always and forever suffer from profitless prosperity, we'd encourage investors to consider the logic and history of Amazon's approach to investing for growth. The dynamics of online businesses being what they are (that is, highly scaleable once a fixed cost infrastructure and customer acquisition foundation have been laid), it makes lots of sense to us on an ROIC and lifetime customer value basis to spend money today building capacity for the sales growth they expect in the future. As well, a subtle but important data point emerged from the conference call that Amazon's book business was actually profitable in the December month, suggesting that, just as management says, they could be managing the business toward profits today if they wished (they could, for example, always sell advertising on their site or sell higher margin items on a merchandise basis). Instead, they believe, and we concur, that growing the top line is the most important factor to consider in the near term. The Great Valuation Debate Will Continue For fun last night, we went back to a model we'd kept at the end of 1997 for Amazon and realized that our 12 months-ago revenue estimate for 1998 was about $400 million. Well, 12 months later, that figure was actually $610 million, half again as much. Given the consistent debate among investors about what to pay for Amazon, this data point highlights the difficulty of accurately forecasting such a hyper-growth company, which of course impacts what we should be paying for them. No, there's still no escaping the raging debate about what to pay for this company, but keep in mind how conservative the estimates for Amazon's revenue have turned out to be over the last two years, and you can get an appreciation for our Strong Buy rating. Of course, we still need to turn to our financial tools to determine if we're in the ball park, so here goes… We Employ Two Valuation Approaches To Reach Our $195 Price Target One of the difficulties investors face is attempting to find a valuation methodology that discounts all of the relevant metrics of the business; its tremendous revenue growth, its (eventual) profitability, and its negative operating cycle and efficient use of capital. To get to a valuation that captures these distinct (but important) elements of the story, we utilize two valuation measures: a discounted market cap to sales multiple (to measure the value in the growth of the revenue stream) and a