Seeking Alpha
View as an RSS Feed

Timothy Phillips  

View Timothy Phillips' Comments BY TICKER:

Latest  |  Highest rated
  • What Netflix's Earnings Really Prove [View article]
    You cannot compare the pricing for cable vs. Netflix (or even other streamers) because the content is completely different. Local programming + sports + news + Live TV vs. re-runs mixed with some good original content. You might be right that NFLX underprices to grow, but you have not proven it in this article.

    Your thesis is that the Tampa Bay Rays should be able to charge the same amount as the Boston Redsox for tickets because they both offer a baseball experience. Not even close.
    Apr 16, 2015. 09:56 AM | 6 Likes Like |Link to Comment
  • Jefferies hikes Amazon target to $465, sees fulfillment edge [View news story]
    Gary - of course you are right. You cannot short this stock on valuation - it is predetermined to rise as a self-fulfilling prophecy. The analyst community, big money and CNBC are all in strong support. It really has been an easy ride for those that get how the market works on stocks like this (at the end of the day, a stock is worth what the last buyer was willing to pay - not its amount of earnings)

    Even though it should continue to go up based on this environment, I have a hard time buying the stock at this point, as don't you fear one-day that 175x 2-yr forward multiple will not hold up? As easily as that last buyer feels it is worth this now, they can quickly change their mind and 25x is a long way from 175x. But here again - that is no reason to short, but maybe a reason not to buy or hold at this level.
    Apr 15, 2015. 08:26 AM | 3 Likes Like |Link to Comment
  • Jefferies hikes Amazon target to $465, sees fulfillment edge [View news story]
    PT is 175x 2016 EPS with a 30% EBITDA CAGR for 2015-2018?

    All of that great stuff amounts to $2.46 in EPS 2 years from now. Wow. Hard to miss that EPS estimate, but I am sure they will figure out how.
    Apr 14, 2015. 02:58 PM | 8 Likes Like |Link to Comment
  • If You Think Amazon Is OverPriced Do Not Think Of Buying Facebook [View article]
    I guess you are trying to be controversial to drum up readership, but this truly laughable. Let's compare the metrics that really matter:

    In CY14, FB had $3.5B in free cash flow (up from $2.8B or +25% from CY13), while AMZN netted -$2.1B (down from+ $0.2B in CY13)

    Facebook forecast
    CY16 EPS: $2.57
    CY16 P/E: 32
    CY16 Revenue growth: 32% (PE/RG = 1.0x)

    Amazon forecast
    CY16 EPS: $2.27
    CY16 P/E: 163
    CY16 Rev Growth Rate: 17% (PE/RG = 9.6x)

    With the S&P CY16 PE/RG at about 1.5x, Facebook is still undervalued, while AMZN is > 6x the market.

    AMZN is almost 10 times more expensive than Facebook on an earnings/rev growth.
    Mar 28, 2015. 10:22 AM | 25 Likes Like |Link to Comment
  • Amazon: Is 2015 Profitability A Fantasy? [View article]
    mshapiro99: R&D cannot be slowed down without crushing AMZN's number one growth driver: AWS - R&D is almost completed correlated to growth in AWS. All AWS costs are capitalized in R&D, and part of why GM% goes up while OM% drops. Slow down spending in R&D, and AWS goes bye-bye .. then goodbye $300's for the stock.
    Feb 12, 2015. 02:45 PM | 8 Likes Like |Link to Comment
  • Amazon Can Make Money When It Wants [View article]
    Dana - "not taking inventory risk"? Have you looked at Amazon's Inventory Days Ratio over the past several years .. it has increased 20 straight quarters, and is now 48.8 days.

    As the fulfillment centers build out, no one notices Inventory Days has gotten much worse. It is worse than Walmart and Costco, and shows that Amazon now manages it daily operations less efficiently than its competitors.

    The myth that on-line retail is more efficient is BS - it can start out that way, as you ship from a small number of warehouses to the whole country, but they have already had to essentially build out "stores" to get two day shipping. Add up inventory costs, fulfillment costs and shipping expenses, and AMZN is inherently less efficient than its comp .. hence the much lower net margin.
    Feb 4, 2015. 10:18 AM | 2 Likes Like |Link to Comment
  • Amazon Can Make Money When It Wants [View article]
    If you included lease expenditures - which you need to (even the company now admits), FCF over past 5 years is a miserable $1.5B only.

    Company trades at 107x past 5-YR's of FCF!
    Jan 31, 2015. 10:22 PM | 5 Likes Like |Link to Comment
  • Amazon Can Make Money When It Wants [View article]
    Dana - there is a difference between GROSS margin and NET margin. Gross margin for CY14 was 29.5%, but NET margin was -0.3%. That operating expenses were 29.8% of sales.

    In CY13 GM% was 27.2%, NM% = 0.4%, OpEx = 26.8%

    So, while GM% rose 2.3% Y/Y, OpEx rose 3.0%.

    In fact OpEx has grown faster than GM five straight years (2010 through 2014). I would say that is a trend. The reason this is happening is that AWS and 3P sales are accounted for at 100% GM - all COGS are counted as OpEX (unlike eBay and Rackspace, etc..) If they were counted as COGS you would see Amazon GM% be flat and net margin still decreasing. It is an accounting trick to fool those who don't pay attention, or chose not to.

    BTW - they do not have guaranteed net profit on 3P sales - they only have guaranteed gross profit - they have plenty of fulfillment, admin and T&C costs on that 3P sale.
    Jan 31, 2015. 08:35 AM | 7 Likes Like |Link to Comment
  • Amazon Can Make Money When It Wants [View article]
    It is not a matter of "making money" .. the question is "how much?" Is the bar that low that they just need to break even to be worth almost $200B?

    No one debates AMZN has value, the question again is how much and the quality of it.

    BTW - they reported $2.2B in negative free cash flow for the past 12 months - good to see they are coming clean with their new total FCF measurement.
    Jan 30, 2015. 09:42 AM | 12 Likes Like |Link to Comment
  • Why I Believe Amazon Chose Debt Financing [View article]
    Amazing - the author has taken the NEED for debt as a positive. This debt adds $240M annually in interest payment to a company with a current ratio well under 1.0, and significant negative real free cash flow (including capital leases) for the past few years.

    This debt is meant to keep the company financed for the next couple of years (as they are burning through $3B per year right now) .. not for a higher ROI.
    Dec 18, 2014. 08:21 AM | 13 Likes Like |Link to Comment
  • Amazon Trades For 370 Years Of Earnings, Jack Ma Thinks It Might Not Be Here In 20 [View article]
    Paulo - it happens with straight debt as much as equity (sometimes even more so). The marketing commitment with the debt underwriting contract leads to trading desks pumping the stock along with analyst price target upgrades. This one played out just as predicted.
    Dec 4, 2014. 09:26 AM | Likes Like |Link to Comment
  • Amazon Trades For 370 Years Of Earnings, Jack Ma Thinks It Might Not Be Here In 20 [View article]
    Jaremi - that sounds about right. It has already started it sideways trade for about a year now in a very up market. AMZN was at $335 in Oct '13, while the S&P500 is up over 18% since then. While the net will be sideways, there will be lots of ups and downs (high Beta) ... a good trading opportunity for the next few years.
    Nov 25, 2014. 08:10 AM | Likes Like |Link to Comment
  • Amazon Trades For 370 Years Of Earnings, Jack Ma Thinks It Might Not Be Here In 20 [View article]
    Paulo - I did track since 2011 the forward earnings projections for AMZN in 2013.

    Here was the consensus estimate for 2013, followed by the stock price in that month (they actually did $0.59 in 2013)
    Jan 2011: $5.75, $180
    Jan 2012: $3.20, $173
    Jan 2013: $1.76, $250
    Apr 2013: $1.48, $262
    Jun 2013: $1.29, $267
    Sep 2013: $0.87, $317
    Nov 2013: $0.73, $358
    Jan 2014: $0.73, $398

    So, EPS was reduced 87% over 2 years, and that wasn't enough as they fell 90% short. And yet the stock more doubled, up 121% over that time frame.

    I am sure 2014 was a similar track, as 2015 has been as well, and every year after will be.
    Nov 23, 2014. 09:01 AM | 12 Likes Like |Link to Comment
  • Just Because Netflix's Price Fell Doesn't Mean It's Cheap [View article]
    Sakelaris - a company is only valuable if they offer a unique value proposition and distinct competitive advantage. Low price is not a value proposition unless it is coupled with lower cost - and they don't have this. Borrowing money and selling shares to buy lots of content and offering it back up at cost to consumers is something any company in the business can do. Only AMZN has been stupid enough to replicate this losing model so far.

    NFLX's game is to keep prices so low that they keep out competition and gather enough users until they have THE Brand and a near monopoly with scale. At that point, they can raise prices. The question is, will they run out of money first? Signs show it will be tough, as they had to raise prices recently to keep this puppy afloat, and look at the impact on new subs. Clearly they have a long way to go before they can raise prices enough to make a difference.
    Nov 4, 2014. 11:39 AM | 1 Like Like |Link to Comment
  • Amazon: Its Business Model Explained [View article]
    Very misleading ... you mention Free Cash flow has been growing as proof of profitability, but then you point to a chart that is of Operating cash flow. FCF = OCF-CapEx. If you put a chart up a FCF, you would see it has been declining for the past 5+ years. TTM FCF is just $1B, down 65% from 5 years ago.

    Amazon is valued at 150x FCF ... that is a return on sales of 1% and a return per share of 0.7%. Not very good at picking investments are they? Fire Phone is another example.
    Oct 28, 2014. 08:03 AM | 4 Likes Like |Link to Comment