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Slim Shady  

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  • Salesforce.com: A Story With An Unhappy Ending [View article]
    "since January of 2011, the company has generated $1.8 billion from financing activities and $3.59 billion from operations. This means that of the $5.39 billion the company has generated over the past 4 years, fully a third came from bankers."

    Considering that almost half of the $3.6 billion cash generated from operations was from the company issuing stock to pay employees - which is a financing transaction - you could say that nearly 2/3rds came from financing activities.
    Dec 30, 2014. 05:11 PM | 10 Likes Like |Link to Comment
  • Amazon's Christmas Gift For Investors: Growing Into Its Valuation [View article]
    Gary - that's Gene Munster, the same Piper Jaffray analyst who had a $420 price target at the beginning of this year. He's only wrong by 30%. At the end of 2012, he predicted they would earn $6.21 this calendar year - consensus is for a loss of $0.75. Pity the fool that listens to Gene Munster's recommendations.
    Dec 18, 2014. 01:54 PM | 19 Likes Like |Link to Comment
  • Amazon's Christmas Gift For Investors: Growing Into Its Valuation [View article]
    The median weighted average operating margin is supposed to be 7.38%, with 25th percentile at 4.35%.

    Operating income for the last twelve months was $98 million on revenues of $85.25 billion. They should be generating operating income of $6.3 billion, yet they have almost none (and likely will be none after the 4th quarter). Would you like to enlighten us as to what comprises the alleged $6.2 billion of "investments" that are flowing through the P&L in the last twelve months. Even Amazon couldn't "invest" (lose) that much on its silly phone idea.
    Dec 18, 2014. 01:25 PM | 6 Likes Like |Link to Comment
  • Amazon's Christmas Gift For Investors: Growing Into Its Valuation [View article]
    "Capex is not going up because Amazon's existing business has become more expensive to run, but because Amazon is investing the growing pool of operation cash flow into the future"

    Unfortunately, this assumption is false. It is becoming more expensive to run and its reported capital intensity is now more than 2x that of Wal-Mart when it was Amazon's size growing at the same rate.

    http://seekingalpha.co...

    Why is their "Capex" so high? Because most of it is not for long-lived capital assets. They are capitalizing a significant amount of operating expenses and amortizing those. The average life of Amazon's Property and Equipment is less than 3 years. They capitalize Internal Use Software and amortize it over 2 years. They capitalize Streaming Video content and amortize it. There was another company that capitalized significant amounts of operating expenses when it's revenue growth began to slow: WorldCom.

    The mantra of "investing in future growth" is plainly a story made up to disguise the actual underlying economics of the business.
    Dec 18, 2014. 01:15 PM | 11 Likes Like |Link to Comment
  • Retailers' Hobson's Choice: Crushed By Amazon Or Exploited By Google [View article]
    "My argument is that there should be some regulations to protect competition..... "

    This is the Euro theory of competition. Not your fault really since you were probably born there, but flawed nonetheless. Regulations to "protect competition" mean that you expect Government intervention to help those that are unable to help themselves. In other words, you believe that it is acceptable for the Government can tell Google what it can and cannot do with its property. That does not defend capitalism as you purport. In a free market, people are able to compete on their own merits. They are not guaranteed success.

    "my view protects more than 1 million businesses that advertise on Googles' platform."

    If Google's customers don't like the way it conducts its business, they are always free to not be customers and use somebody else's platform. If there is no other platform, they are free to create their own. That's what a "Free" market is. Two parties have to agree to do business in a free market, not required to do business by some Government mandate. Google does not have some higher responsibility to you or any other business just because it has built a successful company.

    "If google thrives for the fact it is truly popular, trade regulations (to protect competition) should pose little problems for it anyway."

    You're defending putting shackles on the strong, just because it is probable they would be able to overcome it? While they're at it, should they make your favorite soccer player carry around 50 kilo weights during games just because it would make people more competitive with him? Don't worry, he can probably handle it.
    Dec 17, 2014. 07:31 PM | Likes Like |Link to Comment
  • Retailers' Hobson's Choice: Crushed By Amazon Or Exploited By Google [View article]
    Jimmy -

    Your counterargument is that the State owns what Google has created, not Google itself, and it is the role of the State to use Google's property however it sees fit, through the use of force rather than free trade.

    I'm not defending Google specifically, I'm defending free enterprise and pure capitalism against your socialistic view of the world where politicians take by force other people's property and use them as they wish.
    Dec 17, 2014. 03:37 PM | 1 Like Like |Link to Comment
  • Retailers' Hobson's Choice: Crushed By Amazon Or Exploited By Google [View article]
    And there it is... the Euro socialist has exposed himself.
    Dec 17, 2014. 11:01 AM | 1 Like Like |Link to Comment
  • Retailers' Hobson's Choice: Crushed By Amazon Or Exploited By Google [View article]
    Jimmy -
    "This is way over the top... regulations to ensure a competitive fair playing field (on google as a marketplace) should not be seen as a violation of rights"

    Ahhhh, voluntary trade between two willing parties is occurring, yet you cry for a government to step in and determine what is "fair". Fair is determined by the market, what two willing participants agree upon without the use of force. If those parties don't agree, there is no transaction. Government stepping in to impose their view of fair by using force, i.e. regulation, is the exact definition of violation of rights.


    Dec 17, 2014. 09:44 AM | Likes Like |Link to Comment
  • Retailers' Hobson's Choice: Crushed By Amazon Or Exploited By Google [View article]
    Jimmy, who are you to "feel" what companies can and can't do? Are far as I know, Google has earned everything by trading with other people without using coercion or force. "Most of Google's innovations are purchased" Yes they have purchased innovations with cash or stock with another party who was willing to sell to them voluntarily. Just like the cash you earn you can purchase things that are valuable to you without you coercing anyone. Google is becoming a monopoly, not because of government favors or cronyism, but because they do things better than other people, they are valuable and provide way more in value than what they receive in money. Your solution is to use force to prevent them from interacting on a voluntary basis.
    Dec 16, 2014. 06:44 PM | Likes Like |Link to Comment
  • Retailers' Hobson's Choice: Crushed By Amazon Or Exploited By Google [View article]
    Jimmy1122 - "It really gives people a perspective on just how dangerous Google can be if left unregulated."

    Your life, as well as billions of others, has been vastly improved, not harmed, by all of Google's creations. When was the last time you looked at a paper map to find directions somewhere?
    Dec 16, 2014. 04:53 PM | Likes Like |Link to Comment
  • Amazon: Free Cash Flow Not What The Bulls Purport It To Be [View article]
    Gary J = anointer of credibility, based on his underwhelming resume of being first to comment on a majority of Amazon articles, owning a 3 series convertible beemer, and using past price performance to make future investment decisions.

    Enron and WorldCom didn't start out as accounting fraud. However, they ended up using bad/deceptive accounting to mask the poor underlying economics of their business in order to keep their inflated stock price from collapsing. WorldCom specifically took ordinary operating expenses, payments to lease other companies' communications networks, and classified them as capital expenditures. Where were all the professionals that exposed this prior to it unraveling?

    Again, not saying that Amazon is doing anything outside of GAAP (yet...), but when the underlying economics of the business do not match the expectations built into the stock price, especially when stock is a vital part of the overall employee compensation structure, you should really take a close look at how they account for things. Unless, of course, you only use the past stock performance to judge the worthiness of the company.

    WCOM Stock Price:
    1991: $1.28
    Peak 6/21/1999: $61.99
    Summer 2000: $47.27
    8/1/02: $0.15

    Wish I could find a chat board from Summer of 2000 to find who was defending WorldCom because the stock price had appreciated from $1.28 to $47.27.
    Dec 15, 2014. 11:36 AM | 4 Likes Like |Link to Comment
  • My 2 Cents In The Amazon.com Cash Flow/Capital Leases Debate [View article]
    "was this counted as an expense 20 years ago?" Yes, it was.

    APB (Accounting Principles Board) Opinion 25 in 1972 laid out guidelines for stock issued to employees. "Compensation cost is the excess, if any, of the quoted market price of the stock at grant date or other measurement date over the amount an employee must pay to acquire the stock." Since there is no cost to acquire the restricted stock, it has been expensed since 1972.

    Stock options were not required to recognize compensation expense when the quoted market price on the grant date was equal to the exercise price of the option. That's why most companies used options instead.

    FASB 123 in 1995 formalized this APB Opinion and required additional disclosures with respect to stock options, and it was optional to include the fair value of stock awards as an expense. FASB statement 123 (R) required companies to expense the fair value of stock awards beginning with fiscal years after June 15, 2005.

    "to my knowledge there is no cash paid out."

    What if they bought all their inventory and paid for it with shares? Would you add back their entire cogs to determine the operating cash flow of the business?

    Issuing stock is not an operating activity, it is a method to finance the capital needs of the business. That's why when you sell stock it is in the Financing section of the cash flow statement. Just because you are selling stock and paying employees in a single transaction rather than in two separate transactions does not change the nature of the transaction.

    Dec 12, 2014. 02:12 PM | 8 Likes Like |Link to Comment
  • Amazon: Free Cash Flow Not What The Bulls Purport It To Be [View article]
    Wow Treetis - I guess you either didn't read my post or ignored responding to it. You are focused on the change in cash, Paulo is focused on the Total amount of Capital the company needs to raise to continue to fund its business.

    They will not go out of business as long as they can find ways to finance the capital purchases that are required to run their business, including capital leases. BTW, can you provide a list of all the equity and credit analysts that were calling for the bankruptcy of Enron and WorldCom - they were just using accounting to make things appear better than the underlying economics of the business.
    Dec 12, 2014. 01:27 PM | 5 Likes Like |Link to Comment
  • My 2 Cents In The Amazon.com Cash Flow/Capital Leases Debate [View article]
    Bryce -

    Amazon's stock comp is all restricted stock, which has a determinable value, unlike options which are an estimate of value based on financial models. The significant estimate they must use is the forfeiture rate.

    The CFO makes $160,000 cash salary, with the rest of his compensation in Restricted Stock. It is a real expense.

    Amazon says this: "Operating expenses without stock-based compensation has limitations since it does not include all expenses primarily related to our workforce. More specifically, if we did not pay out a portion of our compensation in the form of stock-based compensation, our cash salary expense included in the “Fulfillment,” “Marketing,” “Technology and content,” and “General and administrative” line items would be higher.

    I always like to look at the same economic alternative (like Paulo has done here between purchasing and leasing equipment) and determine how it would be treated, just to see what the impact is. What if instead of paying employees directly with Stock, they sold Stock to other people and paid the employees cash. How would you treat that transaction?

    Sorry I wasn't able to explain it as clearly as Paulo - surprising since we both speak Texan. I think having the cash flow statement with the red box around it makes it clearer. A picture is worth a bunch of words...

    "Instead of purchasing them and paying with their own funds, which would be classified as a Purchase of Property Plant & Equipment in the Investing section of the Cash Flow Statement, they enter into a Capital Lease agreement. They have in essence purchased the asset, but since it is financed by the seller, it becomes a non-cash transaction and instead is recorded under the Supplemental Cash Flow information at the bottom of the Cash Flow Statement."

    "The Capital Leases will never factor into their definition of Free cash flow, since the original transaction is recorded under the Supplemental Cash Flow information and the payments on the Capital Leases are included in the Financing section of the Cash Flow Statement."
    Dec 12, 2014. 01:10 PM | 6 Likes Like |Link to Comment
  • My 2 Cents In The Amazon.com Cash Flow/Capital Leases Debate [View article]
    So I'll take that as you agree. Treetis?
    Dec 12, 2014. 10:47 AM | 1 Like Like |Link to Comment
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