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Timothy Phillips  

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  • Amazon Loses Money On Both Prime And Its Entire Direct Retail Business [View article]
    Hi Sunil,

    It helps their cash flow more than revenue for the Q as the full Prime revenue ($79) goes to "additions to unearned revenue" in the cash flow statement. They defer the revenue and recognize it over the term of use (so they recognize $6.58/month in revenue). AWS works in a similar manner (I wrote about this in a separate article: http://seekingalpha.co...)

    This has been inflating their cash flow relative to revenue for a few years and is why Bezos wants you to focus on cash flow rather than net margin%.
    Apr 12, 2013. 08:13 AM | 4 Likes Like |Link to Comment
  • Amazon's Revenue Deceleration Probably Continued [View article]
    All good Q's MIchael ... I have come now to think that if Direct retail falls well below expectations, the stock will not be impacted (like last Q). But if 3P slows down, there will be trouble. EPS, total growth, op margin, net margin, quality of cash flow, all do not matter.

    The only two that do matter are Services rev growth exceeding on a GM% increase.

    Eventually the rest have to matter (once cash begins to run low), but right now, they do not, and may not for a while.
    Apr 11, 2013. 05:18 PM | 1 Like Like |Link to Comment
  • Amazon's Revenue Deceleration Probably Continued [View article]
    Hi Michael - I just submitted a new article (hopefully will come out later today, worst by morning) that shows how reliant AMZN is on 3P profits - and this is the area that is under massive attack from eBay (and course the 3P sellers also see comp for B&M as well like best buy).

    My model shows the impact (based on eBay potential, fedex Jan/Feb shipments, channel advisor data, etc..) shows 3P at 35-36% growth (down from 42.7% in the 4th Q). This would be the 7th straight Q of growth declines in 3P. If 3P drops below 30% this year AMZN outlook will be in real trouble.

    Ironic note: What has driven eBay to an all-time high is the fact that investors/analysts believe that eBay will be taking share from AMZN in 3P over the next 3 years based on the 3/28 analyst day. Amazon stock continues to soar anyway! reality will just not stop the bus. Hard to imagine that both can win. Amazon loses money on its Direct Retail business and does not have the cash to compete with eBay's cash printing operations, but I think the Street will need to see this play out before they sell AMZN.
    Apr 11, 2013. 01:23 PM | 1 Like Like |Link to Comment
  • Amazon's Revenue Deceleration Probably Continued [View article]
    I think analysts have accepted the slowing 1P business. If that is what drives the below 20% growth, I don;t the think the stock will drop - in fact it may go up (especially since it will further drive GM% up due to mix improvement). 3P is the money maker for this company - that is where they can get hurt.

    If 3P sales slow to well below 40% growth (to as low as 35-36% in my model), that may shudder the stock even with an overall GM% improvement.
    Apr 9, 2013. 02:17 PM | 2 Likes Like |Link to Comment
  • Amazon's Revenue Deceleration Probably Continued [View article]
    Paulo - when you do this analysis it is more clear to present Total Merchandise volume (TMV) vs. CA numbers. This is what CA tracks, and so the numbers follow better and are a better predictor. Over the past 4Q's (assuming 11% amazon total fee for 3P like eBay):

    2012 Q2, 2013 Q3, 2013 Q4, 2013 Q1

    CA: 47.6%, 40.4%, 38.5%, 32.2%
    AMZN: 41.6%, 36.0%, 30.3%, TBD

    CA is higher by 6%, 4% and 8% the last 3 Q's. If we expect a 6% avg. delta for Q1, AMZN TMV will be 26.2% - that places overall revenue growth at about 19.6% - well below consensus of 22.6% and company guidance of 20%.
    Apr 9, 2013. 12:59 PM | 2 Likes Like |Link to Comment
  • Amazon's Revenue Deceleration Probably Continued [View article]
    Market reaction to this report was comical/typical as Amazon is currently up more than 1% on bad numbers vs. consensus estimates, and yet eBay, which had a huge jump up (not surprising following the bullish analyst day) is up 4x less than Amazon (up 0.25%). eBay should have been up over 1%, and AMZN down. But the insanity continues as the company that generates awesome profits with improved growth outlook lags the company with no earnings and reduced growth.
    Apr 8, 2013. 03:51 PM | 3 Likes Like |Link to Comment
  • Amazon's AWS And The Public Cloud Paradox [View article]
    IncomeYield, 96% of AMZN is breakeven retail business at best whose growth is slowing immensely and with intense resurgent competitors firing at it on all sides (eBay, WMT, Google, Apple, Target, Best Buy).

    Go ahead and value the 4% AWS+digital business at almost any multiple you want with ridiculous growth prospects and you cannot value the whole of AMZN above $150-$180 (if you understand the dynamics of the on-line retail/consumer headwinds to profit).

    I like the company as well, but the headwinds are too strong in many areas and the stock has gotten way ahead of itself. They have missed on results and guidance for the past 5 Q's, yet the stock is near all time highs ... It is set up for a correction soon.
    Mar 31, 2013. 07:13 AM | 3 Likes Like |Link to Comment
  • "Here's a novel way to drive up a company’s share price," writes the NYT's Jeff Sommer. "Pay billions of dollars in additional taxes." Forensic accountant Robert Olstein reckons that companies such as Apple (AAPL), Microsoft (MSFT) and Cisco (CSCO) should repatriate the tens of billions dollars they hold abroad, pay tax on it, and then use the rest of the cash to repurchase stock. That would boost their share prices by at least 20%. [View news story]
    Why pay tax on it, when you can get a nearly free loan against that foreign cash right here in the USA to either buy back shares, offer increased dividend or invest in the business. When the tax holiday comes (and it will come next administration whether its Clinton or a Republican) you can repatriate and pay off the loan.

    A low repatriation tax may just be the best stimulus the US can have right now, but the current admin's ideology won't allow it.
    Mar 24, 2013. 06:53 AM | 43 Likes Like |Link to Comment
  • Thanks in part to its fulfillment center binge, Amazon's (AMZN +1.6%) shipping ops have become more efficient, argues Deutsche's Ross Sandler. Fewer air shipments, a greater ability to bundle multiple items per order, and last-mile delivery optimization are all helping out. Sandler estimates the use of Amazon Prime for shipping hurts profit contribution per order by 9%, but also notes Prime subs tend to order more. (Kiva Systems[View news story]
    Ross Sandler is flatly wrong, as I have shown in my research (http://seekingalpha.co...).

    AMZN has spent $2.3B on building out Fulfillment centers over the past 2-yrs and over that time their gross shipping expense as a percentage of revenue has increased. The reason their net shipping shipping expense as a percentage of revenue has declined recently is that they have charged more for shipping and increased rates for 3P sellers.
    Mar 23, 2013. 11:23 AM | Likes Like |Link to Comment
  • Timing The Next Move In Coal [View article]
    Paulo do you watch ARLP? 7% dividend that increases every Q and great earnings with good cash flow. I am curious on your opinion vs. other coal stocks.
    Mar 21, 2013. 03:54 PM | 2 Likes Like |Link to Comment
  • Amazon Is Getting Gassed [View article]
    Through 11 weeks:

    Q1 2013: $3.556
    Q4 2012: $3.521 (- 1.0% vs. Q1 2013)
    Q1 2012: $3.582 (+ 0.7% vs. Q1 2013)

    - Y/Y comparison will be favorable for AMZN (my estimate is that 2013 Q1 prices will end up 1.6% lower than 2012 Q1),

    - Q/Q comparison will be a headwind for AMZN (my estimate is that 2013 Q1 prices will be 2.7% higher than 2012 Q4)
    Mar 21, 2013. 02:11 PM | Likes Like |Link to Comment
  • The Bank Of Amazon: How Long Will Suppliers, Sellers And Customers Keep The Doors Open? [View article]
    Americannovice - far from leaving AMZN for dead, it has been pumped continuously in the media and by analysts, so I and others have attempted to provide a counter point ... I have always said Amazon is a very good company and I like to use the service, but it is more than 2x overvalued. I would in fact be a buyer in the neighborhood of $100. But you have to be blinded to be a buyer at $260 based on the facts.
    Mar 20, 2013. 07:06 AM | 1 Like Like |Link to Comment
  • The Bank Of Amazon: How Long Will Suppliers, Sellers And Customers Keep The Doors Open? [View article]
    Thanks Tech, I have been sitting on this for a while until a catalyst came along that would should how clear the issue is. That catalyst was the lawsuit and the escalating complaints that now has led to eBay starting an all out war .. one their balance sheet is far more ready to wage.

    Tim
    Mar 19, 2013. 07:08 PM | Likes Like |Link to Comment
  • The Bank Of Amazon: How Long Will Suppliers, Sellers And Customers Keep The Doors Open? [View article]
    BigJ - it is already starting to happen. EBay is getting very aggressive in lowering costs to increase growth of their marketplace .. they are trying to take advantage of AMZN's recent issues (especially after eBay had similar issues in 2010 it wants far in its rear view mirror).
    Mar 19, 2013. 05:07 PM | Likes Like |Link to Comment
  • Why Do Analysts Use eBay Non-GAAP EPS For Estimates? [View article]
    rw1270 - eBay in this case removes amortization of acquired intangible assets (not depreciation of hard assets). This is from paying more than book value for an acquisition or for IP. They had to pay cash up front, but don;t want to take the earnings hit. The interesting thing is that it continues to grow over time, so they continue to add intangible assets, and they want us to ignore that in the P/E calculation ...
    Mar 19, 2013. 04:57 PM | Likes Like |Link to Comment
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