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  • 1 More Reason To Hate Amazon's Valuation [View article]
    The Bank of AMZN continues - AMZN generated an additional $642M in cash by pushing out their metrics again, and inventory mgt got a little worse (numbers are Q/Q).

    - dropped $434M in net cash
    - inventory days (TTM) increased 0.7 days to 45.6 days
    - Days Payable increased 1.0 day to 72.8 days!
    - accrued expenses increased 1.3 days to 28.7 days
    - long-term liabilities increased 0.1 day to 14.5 days

    When will the chickens come home to roost?
    Jul 25, 2013. 05:53 PM | Likes Like |Link to Comment
  • Accounting Change Stands To Inflate Amazon's Reported Revenues [View article]
    Paulo - it doesn't seem like there was any accounting change as the GM% works out on the rev growth by PL.
    Jul 25, 2013. 05:48 PM | Likes Like |Link to Comment
  • Accounting Change Stands To Inflate Amazon's Reported Revenues [View article]
    Hi Ted - my updated model calls for 1c in EPS for 2013 !!!
    Jul 25, 2013. 05:47 PM | Likes Like |Link to Comment
  • Netflix Earnings: Good Not Enough For Premium Stock [View article]
    After rising $55 over the past three weeks in anticipation of a blow out report - the stock is actually up now today on a disappointing report. Sub momentum is slowing even with the massive increase in content spending, and their clarification on margin guidance actually leads to margin reduction in Q4 with continued higher amort due to catch up on deperciation to spending (that will continue to haunt them for serveral Q going forward).

    Hard to understand all of the excitement over a stock in tough financial shape, with massive contionued dilution, massive insider selling, and huge/growing competition. The only cash flow generator (DVD) is shrinking at lightning speed. CY14 FWD P/E sits at 85 on a company growing the top line at 20%.
    Jul 23, 2013. 09:50 AM | 2 Likes Like |Link to Comment
  • Is The New Wal-Mart? [View article]
    Wow - my prediction is already happening. Lazard this morning up'd their price target from $310 to $340 "citing increased confidence that the company’s Web services segment will drive margin expansion. The firm keeps a Buy rating on the stock."

    Amazing - here we go .. their original $310 target was based on AWS growing at ridiculous levels and expanding margin. Remember, AWS is <2% of the company "driving" margins. $30 price increase implies a $14B market cap expansion due to increased margins on <2% (or ~ $2B in revs) of the company.
    Jul 16, 2013. 07:36 AM | 2 Likes Like |Link to Comment
  • Is The New Wal-Mart? [View article]
    NW - Don't kid yourself, it is the same business and the same market. Difference is that Amazon only uses the Internet as its channel. Walmart uses both stores and the internet as channels (and already has its FC's in place local to you - they're called stores).
    Jul 15, 2013. 03:36 PM | 1 Like Like |Link to Comment
  • Is The New Wal-Mart? [View article]
    Walmart's shelf is just as important (if not more) as the AMZN infrastructure. Companies will go to the ends of the earth to be selected a supplier to WMT because it opens them up to the largest retailer (and number of potential customers) in the world.
    Jul 15, 2013. 02:22 PM | Likes Like |Link to Comment
  • Is The New Wal-Mart? [View article]
    Your 1st point is irrelevant as 3P is just like Walmart brining in another supplier to stock their shelves. 3P or 1P it all looks the same on the website .. but the difference is that the user experience can be different (returns, quality, shipping, etc..), whereas Walmart controls all of their inventory.
    Jul 15, 2013. 01:28 PM | 1 Like Like |Link to Comment
  • ChannelAdvisor Data For Amazon In June Is Out, Conclusion Remains The Same [View article]
    Those comments should make you shudder if you are long.

    1997 - they generate no cash from operations, only from employee stock and pushing out payables.

    2003 - "the long term"? It is ten years later and still no profits, cash flow or book value

    2005 - same comments, 8 years later, nothing to show for it but losses ...

    but wait - it is all just around the corner!

    Even more out of line is your initial comment - they have spent a ton of capex and added massive amounts of B&M for logistics, distribution and hugely growing inventory.
    Jul 15, 2013. 12:19 PM | Likes Like |Link to Comment
  • 1 More Reason To Hate Amazon's Valuation [View article]
    June retail sales this morning were not good.

    DOWN 0.1% ex Autos & Gas

    Internet retail up only 2.1% in June.

    Let's see if that stops the train that is Amazon. That is bad 3P comps for them and bad 1P data now for Q2.
    Jul 15, 2013. 08:38 AM | Likes Like |Link to Comment
  • Is The New Wal-Mart? [View article]
    Peter Lynch calls what Amazon does "diworsification"
    Jul 15, 2013. 06:43 AM | 2 Likes Like |Link to Comment
  • Is The New Wal-Mart? [View article]
    Hard to imagine they can get upgrades when 68% of analysts already have AMZN listed at buy/strong buy.

    When 68% of analysts are at buy/strong buy and the price has run massively to within 3% of the mean target price ($317), you can't get upgrades (or even maintain the buy rating) unless they increase the targets substantially (20% or so .. that would place target to around $380).

    And, you can't get that kind of move ($30B increase in market cap) without a massive increase in future financial projections (revs, earnings, cash flow). We know revenues will come in light based on channel advisor and consumer spending, so these estimates can't be raised. The GM% and CSOI have been played already to a point where future projections can't be increased further (that was used last 2 Q's).

    This will be interesting, as I would expect an attempt to raise targets, but what will it be based on? What a game.

    My guess: the potential accounting change (that Paulo discussed) will be enacted to move 3P e-book commissions to fully loaded revenue which increases revenues substantially, and lowers GM% (but keeps GM$ the same). Analysts will see this as a rekindling of revenue acceleration, up their forward estimates, and leave projected GM% nearly untouched (they will say Amazon will make it up in additional e-books and AWS margin they didn't account for in the past). This will allow them higher projected Cash FLow, and raise their targets on the same multiple.

    Of course it is BS (and incorrect), but it might work for another Q to keep the gains coming.
    Jul 14, 2013. 08:48 AM | 1 Like Like |Link to Comment
  • Is The New Wal-Mart? [View article]
    Mark - on that point, I would say the odds favor an increase in target prices, as it has already begun prior to earnings. You bring up a key point though that analysts have Q2 as a decision point on how to proceed. If Q2 really disappoints, with the price so close to the targets, they will have a hard time being bullish (unlike last 9 Q's). Meeting or Beatings on revs, earnings and guidance will give all the cover analysts need to raise the multiple even further for CY14 and raise targets.
    Jul 14, 2013. 08:31 AM | Likes Like |Link to Comment
  • Is The New Wal-Mart? [View article]
    Voiper613 - I wrote an article on the P/S analysis portion of your comment ( As I write in the article, I am OK in valuing a company on a P/S basis during a lack of earnings and high growth if you believe the slump in earnings is planned and temporary.

    The question becomes, what is the correct P/S ratio for Amazon? My articles shows AMZN has been valued (and continues to be) on a 1.8x FWD revenue projection, while they should be valued somewhere in the range of 0.7 to 0.9 based on comparables and estimated financials. The rubber will meet the road on this at some point.
    Jul 14, 2013. 08:17 AM | 1 Like Like |Link to Comment
  • 1 More Reason To Hate Amazon's Valuation [View article]
    That's right Herb, the issue here is that the bubble is limited to only certain "risk-on" assets like AMZN - in fact so few assets, that the money is piling in quickly to just a few (AMZN, TSLA, LNKD, NFLX, etc..) that really creating a massive distortion while many good companies are left behind.

    When the FED, media, economists, etc. look at the market they see a forward P/E of 14.5 on the S&P500 which is a historically below average number. That provides cover for everything is happening. Now, the earnings forecasts for 2013 are really back-end loaded (double digit growth expectation), so while Q2 may not provide a knockout blow itself, it could lead to significant reductions in forward earnings if comments and forecasts don;t meet very high expectations. This could increase the market P/E to a point where those mentioned above become uncomfortable.
    Jul 14, 2013. 08:09 AM | 1 Like Like |Link to Comment