Author Topic: AMZN - Amazon.com Inc.  (Read 641391 times)

Liberty

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Re: AMZN - Amazon.com Inc.
« Reply #280 on: October 26, 2013, 09:53:21 PM »
Good piece on Amazon. Love the apex predator analogy for Bezos.

http://www.eugenewei.com/blog/2013/10/25/amazon-and-the-profitless-business-model-narrative

I just wish I could value the business, and figure out if it's Walmart in the 70s or 90s.
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hellsten

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Re: AMZN - Amazon.com Inc.
« Reply #281 on: October 27, 2013, 01:20:09 AM »
Good piece on Amazon. Love the apex predator analogy for Bezos.

http://www.eugenewei.com/blog/2013/10/25/amazon-and-the-profitless-business-model-narrative

I just wish I could value the business, and figure out if it's Walmart in the 70s or 90s.

Thanks. To me it looks like the market is valuing Amazon like the Walmart of today. That in combination with the competition from Walmart, Alibaba, Overstock, Sears, and the rest of the world, makes me want to stay away. Yes, I can't value growth stocks like Buffett or Fisher.

valueInv

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Re: AMZN - Amazon.com Inc.
« Reply #282 on: October 27, 2013, 09:43:33 AM »
There is another company following the Amazon model, CRM:

http://feedproxy.google.com/~r/AVc/~3/LN1dskO-5Zc/they-dont-make-any-money.html

Palantir

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Re: AMZN - Amazon.com Inc.
« Reply #283 on: October 27, 2013, 09:57:23 AM »

Thanks. To me it looks like the market is valuing Amazon like the Walmart of today. That in combination with the competition from Walmart, Alibaba, Overstock, Sears, and the rest of the world, makes me want to stay away. Yes, I can't value growth stocks like Buffett or Fisher.

It is questionable whether Buffett himself is all that great at identifying and valuing growth businesses. He's made a small number of famous investments, but nothing compared to what Peter lynch did consistently.

I think Amzn has the potential of bring far more powerful than Walmart and eventually I think it will be, but no doubt valuation is a challenge.
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jschembs

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Re: AMZN - Amazon.com Inc.
« Reply #284 on: October 27, 2013, 10:20:29 AM »
"Investing for the future at the expense of today's margins" in my opinion is valuable only if the expenses are expected to generate outsized benefits in future years. This is the whole point behind capitalizing expenditures as assets on the balance sheet and slowly amortizing those expenses over future years. I suppose the argument could be made for certain operating expenses, such as R&D, but sales and marketing expenses provide little future benefit. Marketing expenses certainly help build the brand, but you can't simply turn those off and hope to retain the brand awareness.

ItsAValueTrap

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Re: AMZN - Amazon.com Inc.
« Reply #285 on: October 27, 2013, 04:43:04 PM »
There are parts of Amazon that are in their infancy and bleeding money.

Payment processing companies usually bleed money when they first start.  You can read Paypal's SEC filings before eBay took them over.  They were down over $200M or something like that.  Virtually all of Paypal's competitors failed (and they also spent huge amounts of money chasing the dream)... they too lost hundreds of millions of dollars.  The losses are huge.  Even Google exited payments.

I don't think that this accounts for all of Amazon's losses though.  I read Amazon's 10-K and couldn't figure out how much money they are losing on Kindle, how (un)profitable Amazon Payments is, etc.
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valueInv

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Re: AMZN - Amazon.com Inc.
« Reply #286 on: October 28, 2013, 08:50:45 AM »
There are parts of Amazon that are in their infancy and bleeding money.

Payment processing companies usually bleed money when they first start.  You can read Paypal's SEC filings before eBay took them over.  They were down over $200M or something like that.  Virtually all of Paypal's competitors failed (and they also spent huge amounts of money chasing the dream)... they too lost hundreds of millions of dollars.  The losses are huge.  Even Google exited payments.

I don't think that this accounts for all of Amazon's losses though.  I read Amazon's 10-K and couldn't figure out how much money they are losing on Kindle, how (un)profitable Amazon Payments is, etc.

There is an underlying assumption that the business they enter are going to succeed. Not true:

http://gigaom.com/2013/10/25/amazon-publishing-cant-cut-it-in-nyc-kirshbaum-leaves-as-company-plans-to-scale-back-report/

There is also an assumption that their existing businesses will continue to do well. Again not true. Amazon has a big CD & DVD business. That got disrupted by mp3 and iTunes. They then built up a music download business. Not that too is getting disrupted by Spotify, Pandora and iTunes Radio. All the money invested in those businesses is not down the drain. They have to go back to square one and start again. In the process, they now are selling Kindles at cost to support their content businesses while at the same time selling content below cost. Even with heaving discounting, it was revealed that iBooks was gaining marketshare during the antitrust trial.

valueInv

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Re: AMZN - Amazon.com Inc.
« Reply #287 on: November 05, 2013, 08:08:31 AM »

Liberty

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Re: AMZN - Amazon.com Inc.
« Reply #288 on: November 05, 2013, 06:03:59 PM »
HBR interview with Bezos (audio and transcript) from earlier this year:

http://blogs.hbr.org/2013/01/jeff-bezos-on-leading-for-the/

Interesting, he quotes both Buffett and Ben Graham within the first 3 mins.
« Last Edit: November 05, 2013, 06:13:35 PM by Liberty »
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ajc

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Re: AMZN - Amazon.com Inc.
« Reply #289 on: November 07, 2013, 02:03:56 PM »
Profits? Amazon Prefers Technology | MIT Technology Review

Amazon’s massive investments in technology shape the future for retailers everywhere.

"Why do some stores succeed while others fail? Retailers constantly struggle with this question, battling one another in ways that change with each generation.
In the late 1800s, architects ruled. Successful merchants like Marshall Field created palaces of commerce that were so gorgeous shoppers rushed to come inside.
In the early 1900s, mail order became the “killer app,” with Sears Roebuck leading the way. Toward the end of the 20th century, ultra-efficient suburban discounters like Target and Walmart conquered all..."


http://www.technologyreview.com/news/520801/no-stores-no-salesmen-no-profit-no-problem-for-amazon/#comments