A lot of Amazon's business model and future earnings prospects are built on the premise of no sales tax. This is about to end very soon ans states organize to collect web taxes.
Idiot analysts made long term forecasts as if the web would stay a tax free zone for eternity. Amazon is a high cost operation. They cannot compete with the likes of Walmart or even Best Buy once sales tax is accounted for. The long term prospects for this company are nowhere nearly as bright as analysts think.
BTW - online slaes tax will shift the balance of power back to EBAY sellers who will mostly be exempt from this tax.
> "I don't know how you are adding up the numbers. I only looked at the past 2 quarters. If you look at the past 4 quarters, then SG&A for Amazon has been 3,848 over 18,135 sales. That comes up to 21.2%. Even worse than the 19.8% for the past two quarters."
I got the numbers from the SEC filings. Total operating expenses for the past 4 quarters were $845m+$750m+$758m+$899m = $3252m which is 17.9% of $18,135m in sales.
> "Amazon is a higher cost operation than Walmart and BestBuy."
If Amazon is a "very high cost operation", how come you're having such a hard time coming up with one with lower costs?
I don't know how you are adding up the numbers. I only looked at the past 2 quarters. If you look at the past 4 quarters, then SG&A for Amazon has been 3,848 over 18,135 sales. That comes up to 21.2%. Even worse than the 19.8% for the past two quarters.
Amazon is a higher cost operation than Walmart and BestBuy. Always has been and it will take a major cultural shift to change this. Amazon has relied on the sales tax advantage to generate its low pricing and growth. Unfortunately for them, those days are coming to an end. I wonder who is going to but Books at higher prices than Barnes and Noble and who is going to buy DVDs at higher prices than Walmart.
New York judge OKs Amazon Tax
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By Timothy Prickett Morgan • Get more from this author
Posted in Law, 12th January 2009 22:40 GMT
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A New York Supreme Court judge has approved the state's new-fangled Amazon Tax.
Earlier this year, Amazon.com and Overstock.com sued New York over an ingenious new law that forces the big-name online retailers to collect sales tax if they maintain affiliate networks in the Empire State, and this afternoon, Judge Eileen Bransten dismissed them both.
Bransten handed down her final dispositions in the two cases, which have been watched with a certain amount of trepidation by online retailers because of the precedent it could set for tax collection in states where they do not maintain offices.
Amazon and Overstock did not immediately respond to request for comment.
I agree with the concept but in reality it doesn't seem to work that way. First in many states, cities, etc. AMZN is already collecting and paying taxes. Secondly many of the web sites that already collect taxes on sales (Edwin Watts, Best Buy, The Golf Warehouse, Apple, etc.) it doesn't seem to have much impact on sales. They have more items than the stores do and still have lower overhead online. People expect to pay sales tax it's just a plus when you buy online are find out you aren't paying it.
Amazon has very high overhead. I don't know any place besides New York where they collect sales tax (and we don't know what kind of effect that had on sales). I know they don't collect sales tax in California which is the biggest US market. They don't collect taxes in Florida or Texas either.
Unlike Apple, Amazon is dependent on low prices. People will not pay higher prices is they can get the same stuff at BestBuy or Walmart.
If Amazon is forced to collect sales tax it would lead to less sales. Higher prices = less sales. The question is by how much. My guess is that Amazon's customers are very sensitive to prices and a 6% to 8% increase in prices would lead to a significant decrease in sales.
I've also made lots of cash by trading in at the lows and out much higher in this market. Blasted? All that cash I've made will allow me to buy lots more shares at those lower prices if that is what you are predicting.
You've rode the stock down from 100 arguing about AMZN's valuation all the way down. Now what does that day for you? Not all shorts sold in the 30's . You are going to get blasted more and mark this post for that prosostication. Fool.