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  • Update: Amazon Will Report Amazon Web Services Numbers Next Quarter [View article]

    Thank you for the comment.

    I also use RackSpace as a tool to evaluate what AWS might be worth if AWS was broken off.

    RackSpace which is estimated to have $2 billion in revenue in 2015 has a current market cap of $6.5 billion.

    The problem is Rackspace is currently profitable and Amazon is not.

    I believe AWS as a stand alone company is the most valuable piece of the Amazon conglomerate. But again Amazon is not profitable. So if AWS was say as profitable per revenue dollar as RackSpace, the Amazon without the AWS piece, would even be less profitable than it is now.

    The emperor has no clothes.
    Feb 1, 2015. 04:38 PM | 4 Likes Like |Link to Comment
  • Update: Amazon Will Report Amazon Web Services Numbers Next Quarter [View article]
    Amazon has no P/E and not a sky high P/E as you said.

    In order to have a P/E, a company needs to have earnings. Amazon lost 52 cents in 2014. When you divide a positive number (price) by a negative number (earnings), you get no result.

    Moving on to forward earnings, the average earnings estimate for Q1 and for Q2 is a loss also. So we can assume Amazon will also have no earnings in 2015 and also have no P/E in 2015.

    AWS is in North American Other not Other, which includes International Other.

    AWS is in a massive price war with MicroSoft, Google and IBM. We do not know if AWS is profitable and we also do not know what breakdown will be given on AWS. The only thing that may be given is revenue.
    Feb 1, 2015. 09:47 AM | 8 Likes Like |Link to Comment
  • My Take On's Q4 2014 Earnings [View article]

    That was an excellent point subtracting the increase in working capital.

    Your number gives a lot more weight to the point I was trying to make.

    Calculating cash burn is a pretty tricky exercise but NYer1's modification to a $6.6 billion number might be pretty close to what I was looking for.

    GREAT JOB !!
    Jan 31, 2015. 03:38 PM | 1 Like Like |Link to Comment
  • My Take On's Q4 2014 Earnings [View article]

    The bonds were not negatively affected by the release.

    The coverage ratio is very simple. EBIT.

    The bonds easily met the coverage ratio.

    Staying on the bonds, the guidance, as Paulo said was not good.

    My guess is the company has losses in Q1, Q2 and Q3 and may not meet the coverage ratio. The I in EBIT will become relevant because the interest will grow in 2015. Then we might expect a downgrade depending on the size of the EBIT differential.

    But remember these bonds, which have yields set for the duration of the bonds, compete with yields at a certain period of time. So if you ask your question after Q3, I would for my own objective, have an answer for you.
    Jan 30, 2015. 05:35 AM | 5 Likes Like |Link to Comment
  • My Take On's Q4 2014 Earnings [View article]
    From the Balance Sheet

    2013 long term debt $3.191 billion
    2013 long term liabilities. $4.242 billion
    2013 Total $7.433 billion

    2014 long term debt $8.265 billion
    2014 long term liabilities. $7.410 billion
    2014 Total $15.675 billion

    Increase between 2013/14 $8.242 billion 111%

    The cookie jar is closed.
    Jan 29, 2015. 11:12 PM | 31 Likes Like |Link to Comment
  • Amazon +8%; EPS beat, margin gains overshadow revenue softness [View news story]

    The company also has slides for the conference call giving free cash flow after capital lease obligations.

    I wonder if any of the analysts are smart enough to pick up on this.

    I also wonder if E&Y gave Amazon a little talk behind the wood shed or whatever?
    Jan 29, 2015. 06:44 PM | 3 Likes Like |Link to Comment
  • Amazon +8%; EPS beat, margin gains overshadow revenue softness [View news story]

    Check out page 12 Supplemental Financial Info and if you want compare with page 10 in 2013/Q4 release, same heading.

    They added many new lines dealing with capital lease obligations, lease payments, and free cash flow after these lines. A negative $2.2 billion.
    Jan 29, 2015. 06:39 PM | 5 Likes Like |Link to Comment
  • Should Hoteliers Be Concerned With Amazon Becoming The Next Mega OTA? [View article]
    I think Amazon should get into much more than the booking space, I think Amazon should get into the travel business "whole-hog".

    I think Amazon should first buy an Airline. Southwest will do. Then they could book space on their own airline.

    After that car rental should be next. Amazon has to watch their dollars here. So I think buying National would be a good idea.

    Why should Amazon book travel at some one else's hotel, when they could own their own brand. I think Marriott would fit in nicely.

    And while we are at it, let us not forget the cruise industry. Royal Caribbean would be a perfect fit.

    I think the problem with your article was you weren't thinking big enough. Amazon has a $140 billion market cap. With a cap like that the possibilities are endless!
    Jan 29, 2015. 06:05 AM | 10 Likes Like |Link to Comment
  • Amazon launching cloud corporate e-mail platform [View news story]
    Allan and staux

    This is getting easier than I thought, and I haven't even looked at page 10 of the Q.

    $750 million of the 2012 bonds expire in 2015

    $1 billion of the 2012 bonds expire in 2017

    I am pretty sure the 2014 Bank of America $2 billion credit line is only good for 2 years with an option for 3. By 2016, Bank of America would be beyond silly to extend that debt. Ken Lewis, buyer of Merrill and Countrywide, is gone.

    Now that I have both of your attention. The two of you, Slim or Paulo can easily model this. It took me too long to understand those capital leases.

    This stock can sell at $300 with analyst quarterly loss estimates forever, but once they run out of cash. Game over.

    Have a good night all, I'm done until tomorrow.
    Jan 28, 2015. 08:17 PM | 2 Likes Like |Link to Comment
  • Amazon launching cloud corporate e-mail platform [View news story]

    There were numbers thrown about when those capital lease articles hit about cash flow being negative $2 to $3 billion a year.

    My guess is that might include the Stock Comp. I would not include that, because if an employee wants to take stock, well good for Amazon.

    So where I am headed is, what would the model look like for real cash burn. How hard would it be to do such a model?

    I just checked 2015 analyst earnings estimates on Yahoo and it is now down to 59 cents. My guess is starting from such a low number, every quarter gets estimated down to a loss, and that is one thing Amazon is good at, having a quarterly loss.

    So I think the only way reality hits here is burning that $8 billion and I was just wondering how long that could take and if we can come up with a tool to measure it.

    Jan 28, 2015. 07:05 PM | 1 Like Like |Link to Comment
  • Amazon launching cloud corporate e-mail platform [View news story]

    <<<Who is Amazon borrowing the money from to launch it?>>>

    I guess that was a rhetorical question, as Amazon borrowed $8 billion in 2014 and my guess is they would have trouble borrowing any more.

    But the better question is how long will it take Amazon to burn through that $8 billion.

    Twitch was close to $1 billion.

    Then we have the $2 billion they are going to invest in India...but my guess that will take time.

    Amazon could have capital lease commitments (which are cash flow neutral) of about $5 -$6 billion in 2015.

    I think there are a bunch of commenters on this board that can figure this out.
    Jan 28, 2015. 05:30 PM | 3 Likes Like |Link to Comment
  • Amazon Earnings Preview: Can Company Deliver A Beat This Quarter? [View article]

    When you had your back and forth with Slim Shady on capital leases in December, I do not believe anyone focused on the GAAP depreciation those capital leases were generating.

    Depreciation in 2014 should be close to $4.7 billion which is up about $1.4 billion since 2013.

    More relevant for Q4, depreciation should be about $1.4 billion (funny the same number comes up twice) up close to $440 million from the $963 million in Q4/2013.

    Those pesky capital leases, even if we ignore the commitment and the payments, still generate some interest but a ton of depreciation.

    So in in Q4, we have two major, major headwinds. All this depreciation (growing two and a half times revenue) and that cloud wars with those companies making a ton more money.

    Could this be the start of the end?
    Jan 27, 2015. 09:26 PM | 7 Likes Like |Link to Comment
  • Amazon Q4 2014 Preview: Looking For The Long-Term Picture [View article]

    You were right on the depreciation. My $2.9 billion annual number was Q3/13 not Q4/13 which was $3.25 billion and I see where you got the $4.7 billion. In the defense of my stupidity I was more concerned in coming up with the YOY change in Q4 depreciation (about $430 million) so I got that 4 stuck in my head.

    I hope I don't have the same stupidity in my 50 cent loss estimate.

    I guess if I want to write a long comment, I should do it in Word and just paste.

    But let us expound on your rightness for second. A $1.45 billion increase in annual depreciation is a huge increase in a GAAP expense that they can not hide. The interest on the leases are real. Walmart, Target, Best Buy, MicoSoft and Google are playing as hard ball as any competitors in history and you don't think they change 51 cent profit to a 50 cent loss?

    Jan 27, 2015. 12:54 PM | 1 Like Like |Link to Comment
  • Amazon Q4 2014 Preview: Looking For The Long-Term Picture [View article]

    I loaded a spreadsheet with Capex, Capital Lease, and Depreciation quarterly numbers from the Cash Flow statement for every quarter since Q1/2011.

    I then added 3 extra columns for each of the 3 above mentioned financial numers to show Q/Q % increase, YOY dollar growth and YOY % increase. I did not include operating leases, but with operating leases my numbers would equal yours.

    The depreciation trend is simple to see.

    But a change in the depreciation trend based on the increase in Capex, Capital Leases and Operating Leases I basically lack the skill to see.

    That is why I do not see your 2015 depreciation dollars which are generating your 2015 considerable loss estimate. But also maybe all I need to do is add Operating Leases to my spread sheet.

    Any help here would be appreciated. We can do though a message if you would like.
    Jan 26, 2015. 12:40 PM | 2 Likes Like |Link to Comment
  • Amazon Q4 2014 Preview: Looking For The Long-Term Picture [View article]

    Notice I did have some seasonality for the 4th quarter. I adjusted the 95 cent loss for the 3rd quarter to 70 cents because of the $170 million pre-tax wrote off for the phone. So I increased my estimate of 4th quarter earnings to around a 50 cent loss.

    I use factors to help see this. My two biggest factors were:

    * the cloud price war, which I think is huge because Amazon's competitors in cloud have massively stronger balance sheets.

    * Amazon volunteering to collect sales tax in Florida and Minnesota before they had to. I think this is a huge factor most people missed. For years Amazon has fought sales tax and then they volunteer in those two states. To me that was a major change in their business model.

    The depreciation was something, that always existed. I never saw it.

    We will see on Thursday.


    P.S. Not all analysts are useless, I think one analyst has a 41 cent loss estimate. Plus in the analyst's case, he/she was already lowest, so why go
    lower. I might have done the same thing with my estimate.
    Jan 26, 2015. 09:18 AM | 7 Likes Like |Link to Comment