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

To: Frost Byte who wrote (44365)	3/7/1999 12:19:00 PM
From: tonyt	Read Replies (2) \| Respond to of 164684

>AMZN's book business was indeed profitable in the 4th quarter. You're correct, "But it's not clear that's in our shareholders' long-term interest."

To: Frost Byte who wrote (44365)	3/7/1999 12:47:00 PM
From: Glenn D. Rudolph	Respond to of 164684

Glenn, I have Morgan Stanley, Robertson Stephens, Bear Stearns, and Oppenheimer research right in front of me...here are some answers: 1) AMZN had POSITIVE OPERATING CASH FLOW of $31 million for the year of 1998. Frost Byte, I posted all the reports on this thread way back and accounts payable would make cash flow negative. This is subject to interpretation but a bank would not lend one money on the premise Amazon was cash flow positive. 2) AMZN's book business was indeed profitable in the 4th quarter. Read it again and look for the word December. It is there. The month of December was profitable according to the company. 3) According to Bear Stearns: "Dell Computer Corp and Amazon.com have very similar business models. Both companies sell low gross margin commodity goods, with a high level of inventory turns each quarter and a relatively small amount of capital investments required to increase the level of sales." DELL and Amazon are entirely different business models and I have spent time discussing that. Don't believe everything the analysts write. They are human too not to mention they are motives to boosk the stock price. 4) Customer acquisiion costs dropped to an all time low of $11 (Oppenheimer, 1/27/99, page 6). Yup in Q4 LOL<G> 5) Oppenheimer: "We continue to believe that aggressive investment is the best plan for the business - a plan that will lead to industry leading profitability, market share, and market capitalization. I believe them to be wrong. ) Drugstore.com - I realize they own 46% of the company, but now AMZN receives lead generation fees from drugstore.com, thus increasing both revenues and margins...AMZN does not need to hold any inventory for this venture.....(Plus, drugstore.com will go public, giving AMZN another boost in market cap) This is true but is not what you stated. 7) Look at their full year 1998 numbers....Gross Profit was $133.5 million.....$132 million was spent on Marketing and Sales with the remaining costs totalling $63mm....If Amazon decided to cut out all Marketing and Sales expenses, they would be profitable...however, they are building a business and all analysts agree that spending right now is the way to go....... I see you cannot read. Please note that Amazon to fool people like you, group, all labor, utilitities and even the toilet paper in the fulfillment costs. Please see this post. boards.fool.com "Amazon filed its 10-K today, which is the only time we get to find out what their advertising expenses really were. They only list "Sales & Marketing" expenses in their 10-Q reports, so it's impossible to know if the "Amazon can be profitable any time they want" argument holds any merit. And here's what their advertising expenses were in 1998: The cost of advertising is expensed as incurred. For the years ended December 31, 1998, 1997 and 1996, the Company incurred advertising expense of $60.2 million, $21.2 million and $3.4 million, respectively. Amazon's pro forma operating loss (that is, operating losses sans mergers, acquisitions, and interest expenses) in 1998 was $61.8 million. So let's see -- if Amazon didn't spend any money on mergers, didn't spend a single cent on advertising, and had no interest expenses they would still not be profitable! That is, the loss from their basic operations ($61.8m) was greater than their advertising expenses ($60.2m). So, yet again, the argument that "Amazon can be profitable anytime they want" did not have any merit in 1998. Rimpinths" 8) Bezos and the team IS brilliant...trust me...I have spoken to the guy and know many in the VC circles that agree. The VCs have made a fortune on Amazon stock. I no longer wish to rehash old information that I know is inaccurate. I wish you the best of luck and Amazon may well be a good long term play but you ought to learn to understand SEC filings, think for yourself and ignore the analysts. You can trust me on that. Glenn