Seeking Alpha
View as an RSS Feed

Timothy Phillips  

View Timothy Phillips' Comments BY TICKER:
Latest comments  |  Highest rated
  • "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
  • 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 | 24 Likes Like |Link to Comment
  • Apple Has The Cash To Drive Its Shares Back To $700 [View article]
    The run up last year was not irrational .. they were trading at 13x forward earnings .. AMZN and CRM are irrational. Apple is worth $700. Having the stock trade where it is (P/E less than 9), is not only unnecessary it is unhealthy - it creates additional dilution in stock compensation, lowers acquisition flexibility, and most importantly can lead to employees leaving due to lower compensation than what comp is offering.

    If you believe your stock is cheap and you have too much cash - why wouldn't you buy it back? .. no one knows better than the company what their stock is worth (they know the roadmap). By not buying back, they are telling the world they are not worth more than $420.
    Mar 6, 2013. 06:56 PM | 14 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 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
  • 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
  • Netflix: $35 Billion In Revenue Is Attainable By 2024 [View article]
    10 year forecast? you must be kidding. Analysts can't predict next Q for a company like this, and you want to go out ten years to draw some conclusions? Anything is possible - you could also make the case NFLX will be out of business in less than 10 years.

    This company's stock price is pure speculation as a trading stock - nothing more until the young streaming market shakes itself out.
    Jun 19, 2014. 11:52 AM | 12 Likes Like |Link to Comment
  • Amazon Fresh: One Guaranteed Winner, But Many Potential Losers [View article]
    You're definition of success is ridiculous: "If Amazon can break even with Amazon Fresh, the company will succeed. No ifs, ands, or buts about it."

    You're point is that if they can break even on Fresh (which is a huge assumption on your part .. prove it), they enable more bundling through Prime and increase retail sales. So, let me get this straight - you want to them breakeven on Fresh so they can lose more than already do on retail? Oh, I get it, make up the loses on volume ...

    At some point, AMZN needs to focus on what it already has and turn it profitable - how about they prove that before they continue to distract themselves with new money losers. Any business that needs another unrelated business to turn itself profitable, is not a business at all.
    Jun 13, 2013. 02:39 PM | 11 Likes Like |Link to Comment
  • Amazon: When Does The Trouble Begin? [View article]

    AMZN has begun its transition where it has to worry about cash flow and profits, rather than revenue growth, because as you point out, the balance sheet is in dire shape. We all knew this would come some day, as the low hanging revenue fruit has been picked and they need to increase the quality of their revenue, not necessarily the amount. There is no economy of scale with their prior growth plan (jumping into every growth business possible at the lowest price point).

    Most of their recent changes highlight this - increase in prime price, slowing of content deals, slowing of AWS price decreases, lack of new business announcements, increase in 3P seller fees, etc... With that, it is no longer appropriate to value AMZN on a price to revenue basis, valuation will begin to track their ability to deliver free cash flow and earnings. The market has proven this, as the stock has moved wildly on the notion of prime pricing changes.

    I think if you buy AMZN based on a P/S ratio disconnected from cash flow/EPS, you will get burned over the next year as the transition occurs. If they are valued on profitability, their P/S should be 0.5-0.7.
    Mar 18, 2014. 08:04 AM | 9 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
  • Is The U.S. Building An Unsustainable Welfare Support System? [View article]
    Varan, you haven't talked to enough people then. I know plenty of people here in RI who chose welfare and gvt support programs over work. They typically also have a part time job under the table job as well to make matters worse. Many others also are on extended unemployment and will not look for documented work until the gvt finally ends the program (it is very easy to meet the "looking for work requirement").

    The real sad fact is that this gives the programs a bad name and hurts the true needy and disabled. Everyone here knows it, and they look the other way. A sad way of life in the liberal NorthEast. The shrinking few supporting the many. It is unsustainable.

    I really like the aggregation and cap idea - that is fair and provides incentive.
    Feb 27, 2013. 09:30 PM | 8 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 | 7 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: It Gets Weirder And Weirder [View article]
    Ahhh .. just like old times ... they spend $1B in cash on a money losing operation that only generates $50m/yr in revs pushing their current ratio from 1.0 to 0.88, and they are rewarded by the stock increasing $8, or $4B in market cap. That is a 4x return on their cash in 1 day. Who needs profits or buying back stock when that kind of return is available?

    If this doesn't feel like 2010 I don't know what does.

    Every Q their stock gets crushed when investors look at actual performance. then the 90 days in between fluff and pump comes out and everyone dreams of profit that will never come.
    Aug 26, 2014. 11:34 AM | 7 Likes Like |Link to Comment
  • Amazon And The 'Profitless Business Model' Fallacy [View article]
    Nickbritt - the evidence of your theory is right in the balance sheet. Amazon Inventory days has had a steady climb from 33 days (11.1 turns) in 2010 to 46 days (7.9 turns) currently. The spreading out of warehouses and ever increasing amount of items they carry is making them very inefficient vs. when they had a decent profit last (2010).

    Much has changed since 2010 to not allow AMZN to return to 4% operating margin - fulfillment/warehouse costs, gas has doubled (shipping cost per unit is way up), massive Tech & Content expense, etc...

    If you track Amazon costs, they all grow faster than revenue - there is very, very little fixed. If they haven't hit scale by now ($74B in revs) they won't. Hard to imagine there is some magical revenue number out there that makes costs begin to scale slower than revenue.
    Oct 27, 2013. 10:00 PM | 7 Likes Like |Link to Comment