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Timothy Phillips

 
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  • Amazon's Reward Could Be Worth The Risks [View article]
    Gary/Paulo - I wrote in this link how Peter Lynch would have approached Amazon:

    http://seekingalpha.co...
    Jul 10 08:07 AM | Likes Like |Link to Comment
  • 1 More Reason To Hate Amazon's Valuation [View article]
    I think 2011 was different as that was AMZN's greatest growth year (> 40%, and added $14B in new revenue) and had profits and significant free cash flow.

    They are growing at half that rate now with no profits and little cash flow.

    An interesting chart is to look not at growth % for AMZN, but the amount of revenue $ they add ... the peak was 2011 at $14B .. they added $13B in 2012, and FCT to add $12B in 2013. So, not only is the % growth shrinking, but the actual amount of revenue added as well. It could be there are capacity/logisitcs issues in adding more than $14B at this point. It is a lot revenue to add each year (i.e. the law of large numbers).
    Jul 10 08:05 AM | Likes Like |Link to Comment
  • Amazon To Take On FedEx And UPS? Or Should It Consider An Acquisition? [View article]
    Look, the whole concept of this is ridiculous for 2 reasons:
    (1) for either FedEx or UPS, AMZN is small piece of the entire business, so it is not really a vertical integration play - they would lose most of the other FedEX/UPS revenue as customers would not ship through their competitor AMZN. The one who would win would be the one who is not bought (either UPS or FEDEx) as they would pick up massive amounts of new business.
    (2) Amazon is out of cash - they can barely fund current operations right now, even with a load of new debt. This would need to be an all stock deal, which would crush AMZN as their FWD P/E is > 100, and FedEX/UPS ~ 15 .. this would crush AMZN P/E and make them actually valued on forward earnings (rather than a dream that was Amazon).
    Jul 10 07:50 AM | Likes Like |Link to Comment
  • 1 More Reason To Hate Amazon's Valuation [View article]
    It has been true over and over, but for most shorts it just doesn't reach the level that are short at unfortunately.

    Even with this incredible run recently, AMZN is trailing the S&P500 and the NSDQ by quite a bit for the CY. That tells me that this is not the "risk-on" trade of last year (other own that privilege now, like TSLA, NFLX, etc..). While I don't think it will drop significantly until the market turns, when the market does turn, this should drop much faster.
    Jul 9 05:23 PM | Likes Like |Link to Comment
  • The Threat Of Amazon To Wal-Mart's U.S. Operations Is Real, But Overplayed [View article]
    DS - you make the claim in the article, so the burden of proof is on you. My proof is in the audited financial statements which shows that WMT gross and net margin are higher than Amazon - and significantly so.

    You're argument on shipping expense makes no sense. WMT pays essentially nothing for shipping - their suppliers pay for that delivery, as I am sure that AMZN suppliers also pay to ship to AMZN warehouses. The difference - Amazon pays 9% of revenue to ship to ship to customer's door from that warehouse, while WMT pays $0. That is a huge difference to overcome in a low margin business to begin with.

    In regards to B&M, Amazon has just about as much B&M per revenue as Walmart now that they have built out their fulfillment and inventory centers - AMZN is just as much a B&M as WMT, its just that you don;t walk through it like at WMT.

    None of this analysis includes content, AWS, KIndles, engineers, etc .. I have taken all of that out. Just compare AMZN 1P (product revenue segment in the income statement) vs. WMT.

    My business intuition (and the facts of the income statement) tell me that shipping an item as large/heavy as a TV to a customer is extremely expensive (especially with oil at $102/barrel) vs. them picking it up at the store.
    Jul 9 05:17 PM | 1 Like Like |Link to Comment
  • 1 More Reason To Hate Amazon's Valuation [View article]
    I think the optimism for the stock in the past had been warranted with the huge growth (40%+ every year) and expanding profits (consistently growing through the mid-2000's up to a peak of 3.7% net margin in 2009). Even with those awesome financials back them, the forward P/E was much lower than today.

    2012-2013 is much different and has been driven by QE as the traders have taken advantage big time as I highlight above.
    Jul 9 04:59 PM | Likes Like |Link to Comment
  • The Threat Of Amazon To Wal-Mart's U.S. Operations Is Real, But Overplayed [View article]
    DS, I have broken down Amazon's internals in more detail than almost anyone and understand the cost structure extremely well (read my articles). Amazon operations are less efficient than Walmart. Please provide a link that proves Amazon's infrastructure makes it cheaper to sell a product to a consumer than Walmart.

    I have heard people reference this over and over, but they never can provide a factual argument that beats the facts I provide above (the financial work I documented in my articles). If it exists I want to understand it and maybe it will change my opinion, so I am hoping you can provide it.
    Jul 9 02:37 PM | Likes Like |Link to Comment
  • Amazon's Reward Could Be Worth The Risks [View article]
    right - you never know! Boy, Gary must be able to retire at this point riding on the back of Capital group.
    Jul 9 01:57 PM | Likes Like |Link to Comment
  • 1 More Reason To Hate Amazon's Valuation [View article]
    PSalerno - I do remember and I also called that once the channel down previous high was broken at $274, this puppy would head up to a new all-time high. This is a typical behavior for the stock a couple of weeks from earnings .. drive up the price to kill freshly minted weak shorts and puts, and take profits at the top pushing it down just prior to earnings and after ... then talking heads tell everyone to buy the dip value, and then rinse and repeat .. very profitable trade pattern.

    From a pure technical standpoint, I agree with you that $291-$292 is most likely that local peak. The recent 5 wave run up just hit it technical peak point at that value (from the $248 bottom), combined with a recent hit on the daily chart RSI that just crossed into overbought territory last night. When those two things occur, this stock usually has an 8-10% drop quickly.
    Jul 9 01:32 PM | Likes Like |Link to Comment
  • Amazon's Reward Could Be Worth The Risks [View article]
    RW, Bezos has said that they sell Kindles at cost in order to gain share (so they can sell digital products). So, just the opposite is true - they have foregone profits for share, and yet they have neither. That is a failure.
    Jul 9 01:24 PM | 2 Likes Like |Link to Comment
  • Amazon's Reward Could Be Worth The Risks [View article]
    Also - how can you brag about 3.7% market share? That is a complete failure after this much time in massively growing market. They can expand market share almost in an unbounded way w/o taking other competitors business in this type of market, and still they cannot.
    Jul 9 09:46 AM | 3 Likes Like |Link to Comment
  • 1 More Reason To Hate Amazon's Valuation [View article]
    Woody - well said.
    Jul 8 06:33 PM | Likes Like |Link to Comment
  • The Threat Of Amazon To Wal-Mart's U.S. Operations Is Real, But Overplayed [View article]
    wdchil .. don't forget to add that Amazon requires a credit/debit card, and 29% of Americans (and much less internationally) do have one. Walmart's business is safe with these customers.
    Jul 8 05:03 PM | 1 Like Like |Link to Comment
  • The Threat Of Amazon To Wal-Mart's U.S. Operations Is Real, But Overplayed [View article]
    Hi DS,

    I disagree as the margins have proven that out over long periods of time.

    WMT gross margin was 24.9% in 2012. Amazon gross margin for 1P (Product Revenue) was 13.6% in 2012 (we know this becuase AMZN service revneue is recorded at 100% GM%). So walmart gross margin on direct retail sales is 1,130 basis points higher. Now, about 740 basis point of that delta is due to AMZN 1P shipping expense, but that is a real cost to their business model. The other 390 basis points is due to a combination of pricing and efficiency differences in Walmart's favor. You also cannot ignore the sales tax advantage Amazon had in 2012 which pushed up product margins artificially. What until those comps turn in 2013-2015 as states are beginning to collect now.

    Further - lets look at operating costs .. Walmart spent 19.4% on opex in 2012, AMZN spent 23.4%, so here Walmart's fulfillment, distribution and marketing are significantly more effective (even after you remove AWS R&D spending).

    The journals have a bias with Amazon, as you need to be careful (they tend to downplay the shipping and fulfillment expenses). The numbers published by the companies are more dependable. Also, Amazon inventory turns are no longer more efficient that WMT. Most journals based their comments on that, but AMZN is now up to 45 days and WMT is 47. Amazon's advantage here has disappeared.
    Jul 8 11:24 AM | 1 Like Like |Link to Comment
  • The Threat Of Amazon To Wal-Mart's U.S. Operations Is Real, But Overplayed [View article]
    What evidence do you have that AMZN has a "lower cost structure" than Walmart? I contend the opposite is true, as he income and cash flow statements prove otherwise.
    Jul 8 09:55 AM | 2 Likes Like |Link to Comment
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