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: Bill Harmond who wrote (38619)	2/7/1999 6:24:00 PM
From: Glenn D. Rudolph	Respond to of 164684

Amazon wasn't profitable in book sales for q4. Perhaps I posted that incorrectly. William, I believe you posted what Covey stated. It rings a bell with me that she stated that book sales in Q4 were profitable and most analysts placed that comment in their reports. I do not believe you were wrong. The following is from Keith Benjamine "AMAZON ACCELERATES SPENDING: While Amazon.com had pre-announced results, we were encouraged by news of continued strength in spending in January, suggesting a positive sequential comparison for the March quarter, counter to pervious concerns. Cumulative customer accounts grew to more than 6.2M by the end of December, demonstrating brand strength with manageable marketing costs, which remains the core of the business model. Amazon continues to deliver a positive experience, as confirmed by repeat business representing more than 64% of orders placed during the quarter. If we looked at the core book business, removing investment spending for other product categories, Amazon has already achieved profitability. We believe this comes as a surprise to many. Now the challenge is to invest more through this winning combination of brand strength and strong fulfillment capabilities. This is not a game of price, in our view. We wonder if the returning customers even think much about price. In the race to build capacity we expect the company will invest heavily in infrastructure, distribution capabilities, inventory, marketing, and headcount. Accordingly, it just added substantially to its resources by just raising approximately $1.25B in 4.75% Convertible Supordinates Notes, due in 2009 and convertible into Amazon common stock, at $156.05 per share, representing a conversion premium of 27% over yesterday‚s closing price. We expect this offering will be additive to earnings. That post from Cowan (#10) is right on the money. Covey said that ROIC was their principal gauge, and advised us not to be surprised to see Amazon passing on higher-margin products initially. The problem is the return on invested capital is negative. None of this is the point because we have hased this out. I do believe Covey "lied" and that her statement was the book business in Q4 was profitable. I may take time to locate other analyst's comments on how they interpreted what she said. I am not disagreeing with you. You tell out how you see it. On the other hand, I believe Amazon to be misleading and the analysts are closing their eyes to it. Glenn