bill9300

Amazon: Is 'Free Cash Flow' More Important Than Net Income?

Using AMZN’s method of computing FCF: it appears they had a $393ml reduction in FCF for the 12 mos ended 3/31/08 compared to 12/31/07. It was mostly from the $-366ml difference between
March 31, 08 and 07s, Cash from Operating Activities. (2008) $-645ml - $-279= $-366ml). This was because of the large increase in A/Ps of
$1.2bn 2007/ 2006, with the Short-Term Cash from December Q sales paid to
suppliers in the March Q. (HOW CAN YOU CONSIDER THAT FCF?)


Instead of using fictional companies, why don’t you look at the numbers that Amazon issued in their Statements of Cash Flow. As I said putting billions of $s of valuation on their “FCF” is wrong, meaningless, and I repeat Warren Buffett would not consider the “FCF” from A/P as FCF. The company has little profit and is trying to justify their valuation of $33bn by use of this “FCF”.


finance.google.com/fin...

FCF, for the 12 months ending March 31, 2008
Cash from Operating Activities

3/31/08........-645ml
12/31/07.....1,148
9/30/07..........237
6/30/07..........299
Total....................
Less Cap Exp.......-251
FCF-12 Mos ended 3/31/08.........$788ml
FCF-12 Mos ended12/31/07...... ..1,181ml
Decrease in FCF......................

Above is their method of calculation, beginning with CF from operations.

One analyst projected $1.5bn in FCF for the year, I think he should re-evaluate his projection and thinking.