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  • Amazon: Will Solid Q3 Revenue Growth Be Enough? [View article]
    Just in case you missed it, we wrote

    "Using the Q2 relationship of 1.3 between CA SSS and Amazon actual revenue growth, Amazon requires a 19.83% YoY growth in same store sales over the two months of August and September in order to beat its Q3 guidance."

    To make any projections, we make some basic assumptions. And so we assumed a ratio of 1.3 in the absence of any better data. You are free to assume a ratio you think is more appropriate and apply the same to the data.

    Do you have any better suggestions as to what the ratio might turn out to be? We would welcome your inputs on that.

    Thanks in Advance
    Sep 11, 2014. 07:28 AM | Likes Like |Link to Comment
  • Amazon: Will Solid Q3 Revenue Growth Be Enough? [View article]
    Hello Michael,
    First of all sorry for the really late reply and Thanks again for reading our post.

    Coming to your question on Cloud revenue, it would be easier if Amazon broke out cloud revenue. However, let's understand what we can with the currently available information. What we know is:

    Tom Szkutak quoted on the Q2 CC with reference to AWS,
    "In Q2, we had usage growth close to 90% year-over-year for the quarter"

    Also, The revenue from other income (Largely consisting of AWS) saw an increase of 36% YoY and fell by 3.1% QoQ.

    The fact that a 90% usage growth led to 36% revenue growth (and some of it could be growth fuelled by Other activities) and lesser than Q1 revenue should tell something about the pricing pressure in there. It is clearly evident that the price war is weighing in on AWS growth. While the costs related to AWS have not slowed, profitability of the segment will be compromised.

    Also agree with ClassicLib on the fact that Cloud without a good Saas offering would be low margin business. This has also got a lot to do with the DNA of the three companies in question here.

    Google and Microsoft are essentially software giants (an integral part of their DNA) and could by extension develop good SaaS offerings. However, While Amazon has mastered the art of selling online (Without generating profits of course), competing on the basis of SaaS will be a huge task for them, which will negatively impact their AWS topline as well as margins.

    Hope your question was answered.

    Regards
    Sep 11, 2014. 04:22 AM | Likes Like |Link to Comment
  • Amazon: Will Solid Q3 Revenue Growth Be Enough? [View article]
    Staux,
    With increasing 3P sales as a mix of total sales at Amazon, the ratio will only go higher in favour of ChannelAdvisor data. However, as it is currently difficult to estimate exact change in the ratio, the best estimate would be the last quarter ratio, which is what we have used. The rate of change in the (CA SSS/Actual revenue growth) ratio could be another input to model revenue's in future quarters. So you are right about it, but ,IMO it is the best indicator with the currently available information.

    Thanks
    Sep 11, 2014. 02:28 AM | Likes Like |Link to Comment
  • Amazon: It Gets Weirder And Weirder [View article]
    Paulo,
    Was the earlier launch of ad network a 'Only' mobile launch serving ads on Apps? Quoting from your referenced article from 2013,

    "An Amazon mobile ad network, launched late last year, is now blasting ads via apps on smartphones and tablets, including Apple (NASDAQ:AAPL) iPhones and devices powered by Google's (NASDAQ:GOOG) Android operating system."

    Also the WSJ article states,"The Seattle-based retailer already has a limited business placing ads on other sites. In a sign that it has larger goals, Amazon is testing ways to expand that program with new types of ads."

    A fair conclusion would be that the program which was launched last year is going to be expanded with more listings on third party sites.

    What do you think?

    Regards
    Aug 26, 2014. 08:41 AM | 1 Like Like |Link to Comment
  • Priceline: Solid Top-Line Growth This Quarter But Margins May Contract [View article]
    Trefis,
    You say the company has a higher ROI on its offline advertising versus online advertising. Increasing its offline advertising should result in better performance, i.e: Revenues and profit margins. Are we missing a point here?? And price target of $642, Could you elaborate on that too?

    Regards
    Aug 4, 2014. 04:20 AM | Likes Like |Link to Comment
  • Is Amazon's Cash Machine Faltering? [View article]
    Hello Paulo,
    Greatly respect your inputs. And yes, we have used the Technology line as you rightly guessed. Why do you think that isn't the right way to look at that? From what we read from their SEC this is the right way to look at technology and content costs. And if not this, what do you think is the right Research and Development costs related to Amazon?

    Best Regards
    Aug 1, 2014. 10:09 AM | 1 Like Like |Link to Comment
  • Priceline Headed To $1215, Main 2 Reasons Why [View article]
    Just one query with regard to your residual value, shouldn't the 2017 available cash flow be multiplied by the expected growth rate (5% in this case) before discounting by the cap rate to calculate your residual value?
    Mar 8, 2014. 04:37 AM | Likes Like |Link to Comment
  • Priceline Headed To $1215, Main 2 Reasons Why [View article]
    Hello,
    Great analysis. Just one query with regard to your residual value, shouldn't the 2017 available cash flow by the expected growth rate (5% in this case) to calculate your residual value?

    Regards
    Mar 8, 2014. 02:58 AM | Likes Like |Link to Comment
  • eBay: A Value Buy At Current Price Levels [View article]
    Hello Readers,
    We base our valuation from an investor point of view, after analysis of its financial statements which incorporate its future prospects as well as current valuation levels.
    Jan 2, 2014. 12:36 PM | Likes Like |Link to Comment
  • ROIC vs. WACC [View instapost]
    The critical aspect missed out is Just as JMP10021 has mentioned. As the D/E increases, the equity shareholders will perceive higher risk which will be reflected in the of higher cost of equity(On account of higher Beta). The higher perceived risk will push up the Beta and the overall cost of capital will actually see an increase. If what you have said is true, ideally every company would go in for a 99.99% debt structure, which we know is not possible(Remember Modigliani and Miller?). But It was good to read your comment Mark, made me go back and check the basics. Thanks for sharing :-)
    Dec 24, 2013. 01:42 AM | Likes Like |Link to Comment
  • Finding Twitter's Fair Value [View article]
    I do believe that the forward outlook is a matter of opinion but we differ on two points. It would help if you could throw some light on the below mentioned points.
    You seem to be calculating EPS based on the current outstanding shares. However there are a significant number of shares which will be created/converted over the next two years. We view the total outstanding shares to be in excess of 700 million by end of 2016. Hence the EPS numbers we believe will be reduced by appropriate amounts as the denominator (No of shares) increases.
    The second point is with respect to the growth rate. Twitter's revenue growth rate is already slowing down with the 2013 expected growth rate falling to just over 100%. However your growth rate for 2014 is close 115%. Do you site any particular reason for the increase in the growth rate?

    However We do agree on the fact that Twitter is overpriced...by a huge margin.. :-)
    Nov 27, 2013. 08:42 AM | Likes Like |Link to Comment
  • Priceline Back As A Value Stock [View article]
    We believe that the last two days fall had nothing to do with the fundamentals of Priceline in particular. It was an overall correction in the market and we still continue to believe that $PCLN has an upside potential. The short term rise and fall in stock prices is not something we are worried about. We have been very conservative in our estimates of Revenue growth rates (20% as opposed to companies guidance of 27%) and profit margin and though we may not be sure as to how big the 'Pig' will eventually get, we are pretty sure it is definitely getting bigger than what it currently appears.
    Oct 11, 2013. 09:35 AM | Likes Like |Link to Comment
  • Twitter's Big IPO: Will Social Media Stocks Repeat History And Hurt Investors Once Again? [View article]
    Nice read Justin,
    The 'hype' surrounding the Twitter IPO is undoubtedly coming our way. Not too far ahead will be the losses investors will have to write off. We wouldn't touch this IPO until it is valued under $15, which seems nearly impossible. Any thoughts on what would be the fair value for Twitter??
    Oct 11, 2013. 08:04 AM | Likes Like |Link to Comment
  • Twitter Vs. Facebook: IPO Valuations [View article]
    We used the pre-IPO full year revenues for Facebook as well as Twitter. Definitely Twitter has the ability to grow its topline, but we know that the topline growth is reducing and also Twitter's revenue per user is far lower than that of Facebook, a fact which tremendously reduces the value the company. Another fact to consider is that we have used pre-IPO numbers of Facebook as well and the P/S multiple the company enjoyed before its IPO. And even though the stock has today jumped over its IPO price, we do believe that the Facebook IPO was overpriced. Hence in our opinion a P/S multiple for twitter twice that of Facebook is not a scenario that we rule out, but we definitely feel that would be a risky bet.
    Another point to consider will be the case of Google IPO in 2004. Google had a P/S of less than 15, and went on to give great returns to investors. That is why anything above our average estimate of P/S in excess will be a risky proposition in our opinion.
    Oct 10, 2013. 02:18 AM | 1 Like Like |Link to Comment
  • Yahoo Is A Treasure Trove [View article]
    The stake sale will be done at the time of the IPO. There is no detail about the timing of the transaction. In all likelihood the transaction will be before the stake sale as a post IPO transaction will definitely put a huge pressure on the stock price as has been rightly pointed out by you.
    Oct 1, 2013. 11:37 PM | Likes Like |Link to Comment
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