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  • Why Amazon Has No Profits (And Why It Works) [View article]
    mg, you're exactly right. As Amazon's revenues have increased substantially since 2010 it's profits cratered, my belief is that there are dis-economies of scale at play in Amazon's business model. As Amazon has expanded it's electronics and general merchandise (EGM) product offerings to include just about every product imaginable and has entered new business lines helter skelter it has introduced significant inefficiencies. Some of these business lines, like the Fire Phone, are dead in the water losers. So the company is growing revenue but its expenses are growing faster and eating into earnings resulting in losses. What's bizarre is that the market rewards Amazon and it's lack of profitability with a huge premium over other retail and tech large cap companies that are all highly profitable and in many cases pay dividends. This is a company with a market cap of $160 billion that can not turn a profit! What's wrong with this picture?
    Sep 5, 2014. 05:37 PM | 5 Likes Like |Link to Comment
  • Amazon Has High Growth Potential: Determining Intrinsic Value Is Difficult [View article]
    Mike, you've hit the nail on the head.
    Aug 24, 2014. 06:26 PM | Likes Like |Link to Comment
  • Amazon Has High Growth Potential: Determining Intrinsic Value Is Difficult [View article]
    "Amazon has moat after moat."

    InvestingInvestor, I respectfully disagree, I don't believe Amazon has any moats. If it had moats it would be able to raise prices and net margins. Amazon's businesses are all highly competitive and have extreme pricing pressures due to this competition, that's the opposite of having moats. That's why there is so little profit in Amazon's retail and AWS businesses. Major competitors include deep pocket companies like WalMart, Target, Costco, Google, and Microsoft that can go toe to toe with any company in the world. All of these competitors are much more profitable and have more cash than Amazon. I don't see this competition ever going away, therefore I don't see any of Amazon's current business lines ever having a "moat". So low prices and low profits aren't going away as far as Amazon is concerned, they're here to stay.
    Aug 24, 2014. 11:09 AM | 5 Likes Like |Link to Comment
  • Amazon: $389 Or $209? Pick Your Scenario [View article]
    IMO your bull case operating income is crazy optimistic, your bear case operating income is just wildly optimistic. You even show $200 million for this year in both cases when it looks pretty likely that they will report a loss. Given Amazon's earnings history since the down slide started after 2010 I don't see how anyone can reasonably predict a prolonged period of improving earnings for this company. Amazon has not demonstrated that it can sustain positive substantive earnings with it's business model. In fact it has demonstrated exactly the opposite, consistently missing earnings estimates and disappointing even after estimates are brought down quarter after quarter. Rather than a prolonged period of earnings growth for this company, I believe the greater likelihood is that Amazon will continue to report losses and insignificant earnings for the foreseeable future.
    Aug 20, 2014. 06:14 AM | 3 Likes Like |Link to Comment
  • Amazon Stuck Deep In The Jungle [View article]
    Don, Amazon can't wave a magic wand and suddenly have a 5% or 12% net margin. Net margins are a product of prices, revenue, and costs. Amazon is in highly competitive businesses in which low prices are crucial to maintaining and growing market share. If Amazon decided to raise prices to allow 5% or 12% net margins they would lose customers and revenue/market share faster than you could say Bezos. Amazon's competitors would have a field day touting their lower prices and stealing customers and sales. The other big problem holding down net margins for Amazon is on the cost side; shipping costs are increasing and are a huge anchor as EGM sales grow as a proportion of overall sales. Shipping costs makes Amazon inherently less efficient than old school brick and mortar especially regarding EGM sales. This is one reason why the big brick and mortar operations like Walmart, Target, and Costco have much higher net margins than Amazon. Given the highly competitive nature of its business and it's cost structure I can't see how Amazon can raise it's net margins to anywhere near 5% let alone 12%.
    Jul 30, 2014. 08:51 PM | 3 Likes Like |Link to Comment
  • Update: Amazon.com Earnings Estimates Revisions [View article]
    "The best business to own is the business with little to no competition."

    ForeSight, respectfully, Amazon has tons of competition and will have tons of competition forever. Amazon is in competition for retail dollars, it's competition includes other etailers as well as brick and mortar stores. So WalMart, Target, Costco, BuyDig, Best Buy, to name a few are all in the game and increasingly are beating Amazon on price or price matching. Concerning AWS there is growing competition from companies like Google and Microsoft. Virtually every business Amazon is in is extremely competitive, that's why Amazon's prices are low and it's profitability is low and will stay that way. Many of these competitors have deeper pockets than Amazon and are not going away, they're going after customers. The fact that many of them are far more profitable than Amazon and growing cash reserves every quarter makes them formidable competitors indeed.
    Jul 30, 2014. 11:20 AM | 3 Likes Like |Link to Comment
  • What Amazon's Earnings Won't Tell You [View article]
    Ravi, you compare Amazon with Apple using certain metrics to try to show Amazon in a positive light. Here is where earnings do tell a very different story. In this last quarter, the slowest of the year for Apple, Apple earned more than double the money that Amazon has earned in it's 20 year history. Data from Q Charts. Enough said.
    Jul 28, 2014. 12:02 PM | 4 Likes Like |Link to Comment
  • Amazon: The Perma Bears Will Cost You Money If You Listen To Them [View article]
    Just the opposite, they're diluting their stock with stock based compensation and awards.
    Jul 28, 2014. 11:07 AM | 6 Likes Like |Link to Comment
  • Apple And Me: Why I Finally Bought Some Apple Shares [View article]
    "The ONLY way anyone is going to beat Apple is by being better. Do that, and you have a chance. Talking the talk won't do it, mind. You've got to walk the walk, because people see through the flim-flam. They're not as dumb as some people make out. "

    steftheref, even that may not work at this point. I bought my first Apple product, an iMac, in 2008. Now I'm fully in the Apple ecosystem with iMacs, iPads, and iPhones. My experience has been so great that I'll never switch, when I need another device I don't even consider a non Apple product, and I don't think I'm alone. I have a couple of friends who also switched to Apple a few years ago and now they are totally hooked. I believe the population of committed Apple customers is growing and Microsoft, Nokia, Samsung, you name the company, would have to pull an incredible miracle to win them over. I also bought a bunch of Apple stock in 2009 and held on to it. I don't plan on selling any time soon.
    Jul 27, 2014. 06:07 PM | 23 Likes Like |Link to Comment
  • Update: Amazon's Losses Widen [View article]
    Amazon's gross margins are a work of fiction. The following is from a recent article by Paulo Santos:

    "One of the things which has been used to promote Amazon.com stock is the tale about how gross margins are improving. This is both misleading and dishonest. Anyone with a modicum of honesty would point out that Amazon.com accounts for AWS and 3P (third party commissions from marketplace sellers) at 100% gross margin, and then includes the true variable costs of these activities lower in the P&L, in the "technology" cost line (AWS) and "fulfillment" (3P)."
    Jul 27, 2014. 01:20 PM | 1 Like Like |Link to Comment
  • Why I Bought Amazon.com After It Dropped 10% [View article]
    Amit, I wish you luck with your investment, but basing your decision on past performance is risky in this case because I think there is a significant increase in negative sentiment regarding the company's stock. In the lase five years I have not seen anything close to this degree of negative sentiment regarding Amazon. The huge loss predicted for the current quarter has resulted in another huge bring down of future earnings estimates, it happens almost every quarter now. Amazon announces earnings, they disappoint, future estimates are brought down. At the beginning of this year Amazon was expected to earn well over $2 a share for the year, now analysts are estimating maybe $.10. This is a company valued at over $150 billion that has been around for 20 years that has tiny net margins at best, negative net margins at worse. The stock is seriously over valued and ripe for further declines.
    Jul 27, 2014. 01:09 PM | 5 Likes Like |Link to Comment
  • Ignore The Bears And Buy Amazon [View article]
    $vix,yesterday I did a price comparison on a Sony 55" 4K Television using PriceJump (http://bit.ly/1qinGj3). You go to Amazon, find a product to buy, copy the Amazon page URL and plug it into the PriceJump page and it automatically checks other sites to see if you're getting the best price or if there are better prices elsewhere. I found that I could save $859 by going to Abes of Maine, the price includes free shipping. The web page is below:

    http://bit.ly/1qinGj3;jsessionid=abcsPHtoxr...
    Jul 17, 2014. 01:05 PM | 2 Likes Like |Link to Comment
  • Ignore The Bears And Buy Amazon [View article]
    "One of Amazon's key advantages is its low-cost operations. The cost to maintain its fulfillment center network is significantly lower than having a large physical retail presence, allowing Amazon to price below its brick-and-mortar peers while still generating excess economic returns. "

    The author ignores the high cost of shipping. There is ample evidence that Amazon's high shipping costs are a major reason why it's margins are in the crapper. Amazon's shipping costs make the overall cost of it's retail operations more expensive than it's brick and mortar peers. That's why Walmart, Target, and Costco have much higher net margins and profits and were able to sustain profits even during their high growth period, unlike Amazon.
    Jul 17, 2014. 11:15 AM | 5 Likes Like |Link to Comment
  • Buy The Rumor, Sell The News On Apple's New Watch [View article]
    The author makes the mistake of pinning the future success or failure of Apple on the success or failure of the iWatch; that's immature and silly. Whether the iWatch is a hit, just an OK product, or a flop will make little difference for Apple in the long run. Apple's long term health is more tied to the iPhone, iPad, and the overall continued refinement and improvement of the ecosystem and user experience. I don't know if the iWatch will be huge or not, and I'm not overly concerned one way or the other. I am confident that Apple's future is very rosy regardless of the success or failure of the iWatch.
    Jul 2, 2014. 10:38 AM | 1 Like Like |Link to Comment
  • Apple Bulls: You Win [View article]
    "And while $500-600 is a lot for a phone, it's really incrementally only $200 more than the alternatives, and has every feature/status/quality... of use/ecosystem sticky ness advantage."

    Fear the cow, I second your comments but would like to point out that given the high resale value of used iPhones, the out of pocket cost to the user is sometimes $0 when they upgrade. I upgrade my iPhone every 2 years, last time I did it my new iPhone 5 didn't cost me a penny because I sold my iPhone 4S for over $200. I'll be buying an iPhone 6 in the fall and don't expect to pay more than a few bucks.

    I never had an Apple product until 2008 when I bought my first iMac, now I am a certified Apple junkie-I have a new iMac, an iPhone, and an iPad and wouldn't even consider getting a non Apple product in any of those categories. The quality of the products and customer service and the way the devices all work together seamlessly makes the Apple ecosystem/user experience uniquely incredible. I hope Apple stock makes or exceeds the price targets you suggest, good luck investing.
    Jun 9, 2014. 02:45 PM | 2 Likes Like |Link to Comment
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