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

To: John Donahoe who wrote (54593)	5/2/1999 5:28:00 PM
From: Glenn D. Rudolph	Read Replies (1) \| Respond to of 164684

Marketing and sales............. $133,023 mil How much of the above number do you think is fullfillment cost? An estimate/guess will do. From the 10Q "Revenue Recognition The Company recognizes revenue from product sales, net of any discounts, when the products are shipped to customers. Outbound shipping and handling charges are included in net sales. Revenue from gift certificates is recognized upon product shipment following redemption. The Company provides an allowance for sales returns, which has been insignificant, based on historical experience. Advertising Costs 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. Product Development Product development expenses consist principally of payroll and related expenses for development, editorial, systems and telecommunications operations personnel and consultants, systems and telecommunications infrastructure and costs of acquired content. To date, all product development costs have been expensed as incurred." Clearly, advertising expense was only $60.2 million of the $133 million that they placed in marking. Therefore, fulfillments costs (labor etc) were $73 million. This is in a footnote and while looking for the amount spent on advertising, I confirmed that the gift certificates bought for Christmas likely showed as revenue in Q1 of 99. That could be a huge relative number since it makes a great last minute gift when one has forgotten something. Glenn PS If one really researches Amazon's 10Ks and 10Qs, one finds their earnings releases to be very misleading. The comment they would be profitable without advertising is totally inaccurate but would appear to be true if one does not read all the footnotes. It is my opinion this is intentional.