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Amazon.com, Inc. Message Board

  • fredboy fredboy Jan 27, 1998 4:33 AM Flag

    Growth,Growth,Growth

    Whats all this debate on growth? The fact is AMZN is growing like crazy and so are its LOSSES!!! The more they sell the more they loose. Wake up folks ! You have a fast growing, loosing company that is burning up its equity faster than the space shuttle. Look out below!!

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    • I've read rimpinths analysis and thought it was excellent, particularly the point about Amazon's fourth qtr sales increase being about the same as the fourth qtr sales increases of every other bookstore, ie largely Christmas related.

      I was interested in the Motley Fool's analysis though, because I think they've helped drive the stock price.

      The Hedgehog, http://www.hedge-hog.com

    • This is a link to a response to the MF's balance sheet analysis. It is posted by someone named "rimpinths" and is the BEST analysis I have seen....read it at
      target=new >http://boards.fool.com/Message.asp?id=1060123000222001&sort=postdate


      (Yahoo sucks, I would have posted it here but they alot a tiny amount of space for posting and dont allow any long messages)

    • This is a link to a response to the MF's balance sheet analysis. It is posted by someone named "rimpinths" and is the BEST analysis I have seen....read it at
      target=new >http://boards.fool.com/Message.asp?id=1060123000222001&sort=postdate


      (Yahoo sucks, I would have posted it here but they alot a tiny amount of space for posting and dont allow any long messages)

    • This is a link to a response to the MF's balance sheet analysis. It is posted by someone named "rimpinths" and is the BEST analysis I have seen....read it at
      target=new >http://boards.fool.com/Message.asp?id=1060123000222001&sort=postdate


      (Yahoo sucks, I would have posted it here but they alot a tiny amount of space for posting and dont allow any long messages)

    • The following is a reprint of a post found on the 'Motley Fool' message bords. The author goes by the name "rimpinths", and is one of the best readers of a balance sheet that I have encountered. his post was in response to one of the MF's analysis of AMZN's balance sheet...........find the board at
      target=new >http://boards.fool.com/Message.asp?id=1060123000222001&sort=postdate


      I appreciate your comments about the growth in Amazon's current liabilities during the last quarter. I agree with your statements that this is not necessarily a bad thing. In most cases, it is good financial management. Why pay for something now when you can pay for it later? You'll have the resources to exploit other opportunities that may arise in the meantime.

      I even read over some of your statements about financial management in in your "Cash-King" article. I find it contradictory
      that you would apply the Cash-King criteria to Amazon even though you state, "We don't look for cash-king companies with anything
      less than $1 billion in annual sales." You go on to discuss current liabilities and you state, "Those are the bills that have to
      be paid in the next year, and we'd like the company to be strong enough to hold off those payments as long as possible." After
      reading your article, the impression I received was that a company would have to meet the first criteria before the second criteria
      would be useful.

      When talking about Cash-King companies, you mention names such Coca-Cola, Microsoft, and General Electric. For companies like these, yes, it is a good thing to have a high current liabilities balance. They have a steady stream of profit and they won't have any problem paying back any outstanding short-term balances. With no earnings to date, and none likely in the near future, unpaid balances are a much more serious issue for a company like Amazon.

      You also state in your article that Coca-Cola has $947 million in long-term debt and sales of $4.95 billion during the 3rd
      quarter of 1997. This ratio of LT debt / sales is about 0.19. Compare that number with Amazon for the 4th quarter: LT debt / sales =
      $76.5 million/ $66.0 million = 1.16. (And that's during their most favorable quarter of the year!) Amazon has a LOT more long-term
      debt to worry about than Coca-Cola does and any rise in current liabilities should be examined with more skepticism. All
      your arguments in favor of high levels of current liabilities are applicable only to Cash-King companies like Coca-Cola. They are a different matter altogether for a small, unproven company like Amazon.

      Moreover, the ratio you calculate in your post, (current assets - cash) / current liabilities, isn't really applicable to a company like Amazon. Amazon's $109 million in cash consists of about $75 million of long term debt and the rest is the remainder of the IPO. None of it is earned money. You mentioned that cash is oxygen to a company. A company like Coca-Cola breathes in oxygen on its own; Amazon is having oxygen pumped in by means of a life support system. Big difference.


      (continued next post...)

    • What about seeing the losses not as losses, but as investment?!

      AMZN is fast growing in a fast growing market (e-commerce).
      I bet their mgmt knows exactly what they do. They have a tremendously fast growing customer population. They have
      loyal customers - more than 40% repeat. They have the best technology, customer relationship and service philosophy implemented, which could be a blueprint for others. They just can afford to invest now, making a paper loss, to get to profit later when they have shown the competetion how to play this game
      and when they will have secured their place in the market. Well, Barnes&Noble is bigger, but AMZN is more focused, with less overhead.

      And don't forget they are growing from their own momentum and
      from the dramatic growth of the internet and e-commerce in general.

      For me the question is not if they go down somewhat today, lets
      say 30% - that would still be the level from just a few months ago.

      The question is: where will they be in a couple of years, when the internet is commonplace and AMZN a brand as lets say Yahoo.
      Then they will have room and time for consolidation and the necessary economies of scale. At the moment I do not see why
      they should not achieve this state.

      Then they will earn the fruits of their current
      investments ("losses").
      And then you should still be around.

      Hint: check their website for current job openings. Could give
      a glimpse on the direction they will be going in the near future.
      (I bet they are not looking for a guy for
      'vendor relations - MUSIC', just because the
      boss likes ACDC...) Think about it!

      For me AMZN is a clear long-term buy.
      If it goes down today: good!

      Thanks

      • 1 Reply to brinkmann1
      • refer to my msg #320. Their investments are burning equity(cash) at a tremendous level. I don't question AMZN as a good
        company with a good product/approach BUT it cannot sustain a $1.4 billion market cap with equity disappearing at an alarming rate.
        They must sell more stock OR borrow more money to sustain this growth. Both will be bad for share prices.It's purely a question
        of stock valuation.The stock is extremely vunerable to a severe drop. The only thing holding this stock up is the short supply
        AND a 2.4million share short interest.The shorts could run this stock UP in the short run BUT as soon as supply
        increases(offering or management selling) watch out below!

 
AMZN
769.00+9.78(+1.29%)Aug 26 4:00 PMEDT