when they have to reissue new debt! Are we getting the picutre now? EVERYTHING IS GREAT FOR AMZN WHEN IT IS ON THE THRONE AS THE MOST LOVED AND SUPPORTED STOCK IN THE MARKET. Retring debt a few years ago was very bullish, and so is the reissuing of debt bullish. That's the message when you have a stock like AMZN that is uiiversally loved and supported again and again! It's really that simple.
The free bond money was great for shareholders as it got the company past a near term liquidity crisis. After paying for the HQ real estate, AMZN should have about $1B in working capital. Remember, at 9/30/12, the company had $0 working capital. The 9/30/12 cash existed only because the company had not paid employees or vendors. Hard to believe the investment grade rating when the agency analysts base the rating on future market share gains, future product launches and future profitability. Moody's stated it would look to downgrade AMZN if the debt/EBITDA ratio exceeded 3.25x. If you factor in the operating lease obligations at 9/30 and add the new bond debt, the company is already leveraged well above 3x. And this assuming a $3B EBITDAR number for 2012.(net debt+op lease obligation)/(EBITDA+rent expense)
Looks like you still get what you pay for from the rating agencies. Nothing has changed at the agencies,
FWIW, S&P will look back on this rating and see that it wildly underestimated the risk to cash flows. The entire business model presupposes a cost structure that is backward rather than forward looking....