Better Way to Spend $87BB (AMZN Mkt Cap) theStreet.com Tim Melvin
Major issue is that this projected cash flow is NOT distributable to shareholders until its converted into earnings - which is crux of the problem as margins head lower with no plan to reverse course. Amazon's cost structure has been an issue since they formed the company.
The cost of doing business is higher than traditional retail due to higher labor costs associated with paying engineers to build and maintain IT infrastructure, website optimization plus costs of warehousing and shipping and ad in poor pricing discipline and you have a recipe for a looser.
This company is a paper tiger and Tim's analysis is spot on.
I wouldn't be surprised to see AMZN loose money in 2012 as margins will continue to face pressure due to rising inputs costs associated energy and pricing algorithms designed to offer lowest price in every category regardless of cost of goods sold.