Author Topic: AMZN - Amazon.com Inc.  (Read 623566 times)

JAllen

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Re: AMZN - Amazon.com Inc.
« Reply #550 on: July 11, 2014, 12:11:35 PM »
what do the operating margins look like if you overlay them on the same chart?


Everyone knows that operating margins are essentially zero.  Do you believe this is the only thing investors should consider and that GAAP numbers portray the truth?


dwy000

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Re: AMZN - Amazon.com Inc.
« Reply #551 on: July 11, 2014, 12:19:46 PM »
No, but I believe operating margins are more important than gross margins.  Just like I believe that free cash flow (after adjusting for stock based comp) is more important than GAAP earnings.

PatientCheetah

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Re: AMZN - Amazon.com Inc.
« Reply #552 on: July 11, 2014, 04:55:49 PM »
just like there are a variety of investment horizons, there are a variety of investor base. in the end of day, we all should do what make the most money for us. thanks to this thread, i am happy with my amazon gains, i understand the speculative element in the investment thesis. If I see a shift in the amzn investor base's belief system, i will be flexible enough to sell.
« Last Edit: July 11, 2014, 05:06:44 PM by PatientCheetah »
risk as little as possible until all the stars have aligned

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JAllen

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Re: AMZN - Amazon.com Inc.
« Reply #553 on: July 24, 2014, 04:22:55 PM »
I wrote up our notes on today's conference call here:


http://jallencapitalmanagement.com/amzn-amazon.html


A couple highlights:
AWS reported usage growth of 90%We believe this is the first time AMZN has reported this figure. Usage growth of 90% with price declines of ~40% to revenue growth of ~55%.

AMZN is now expensing $100 million per quarter on original video content alone
Mr. Szkutak stated that AMZN is expensing $100 million per quarter on original video content that AMZN is producing. He also stated that costs are not capitalized (at: 23:25), which we believe is a departure from how other companies that produce their own video content like Starz (STRZA) account for their self-produced content. We believe that AMZN now spends at least $2 billion on video content per annum.


Laxputs

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Re: AMZN - Amazon.com Inc.
« Reply #554 on: July 24, 2014, 04:32:15 PM »
-Large earnings miss.
-23% growth over last year's quarter.
-Highest gross margins ever at 31%.
-Stock down 10% after hours.

It's hard for me to comprehend the amount of investment capital expenditures taking place at Amazon:
-Started an innovative smartphone company.
-Funding pilot programs for Fire TV.
-Massive infrastructure spending at home and abroad (India, China).
-Amazon Game Studios putting out new games.
-Prime music.
-Kindle Unlimited.
-Amazon Fresh expansions.
-AWS expansions

The company's revenue can organically grow for years and years at double digit numbers given trends of e-commerce. The company's revenue will also grow from apparent multiple new revenue streams. My investment thesis is based on normalized earnings after expansions/growth spending have stopped. I can't imagine expansions stopping for several years though. I would guess, based on previous earnings margins in several years before the massive fulfillment center expansions and massive growth expansions, they have underlying earnings margins of between 7-12%. And I own a company that is priced around 18-40x normalized earnings that is growing like a weed.  I get rich if the estimation is conservative. I have reasonable returns if it's at the high end.

dwy000

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Re: AMZN - Amazon.com Inc.
« Reply #555 on: July 24, 2014, 07:21:18 PM »
Tough quarter.  Same old story:
- good revenue growth;
- gross margin growth but operating margins crushed;
- every category of operating expense increased as a % of revenues;
- negative free cash flow for the quarter (before stock based comp);
- TTM free cash flow of only $1.0bn (again, before subtracting stock based comp).
- guidance that things are only going to get worse on the expense front - op losses of $400 to $800MM?!?!

"Other" revenue growth slowed to 38% from over 60% (Other is assumed to include AWS). 

Employee count is astounding - up 8,000 in the quarter alone.  Up 35,000 in the past year.

The "invest for the long term" thesis may continue to hold for some, but the time frame to convert to "normalized" operating earnings appears to be getting further away not closer.

Investor (and stock) reaction would suggest the patience to prove out that thesis is waning.

LC

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Re: AMZN - Amazon.com Inc.
« Reply #556 on: July 24, 2014, 08:16:08 PM »
I wrote up our notes on today's conference call here:


http://jallencapitalmanagement.com/amzn-amazon.html


A couple highlights:
AWS reported usage growth of 90%We believe this is the first time AMZN has reported this figure. Usage growth of 90% with price declines of ~40% to revenue growth of ~55%.

AMZN is now expensing $100 million per quarter on original video content alone
Mr. Szkutak stated that AMZN is expensing $100 million per quarter on original video content that AMZN is producing. He also stated that costs are not capitalized (at: 23:25), which we believe is a departure from how other companies that produce their own video content like Starz (STRZA) account for their self-produced content. We believe that AMZN now spends at least $2 billion on video content per annum.



thanks for sharing.
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DTEJD1997

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Re: AMZN - Amazon.com Inc.
« Reply #557 on: July 24, 2014, 08:28:50 PM »
Maybe AMZN is just going to lose a very little bit of money on each sale...

BUT

They are going to make up for it by doing VOLUME!

Palantir

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Re: AMZN - Amazon.com Inc.
« Reply #558 on: July 24, 2014, 08:50:10 PM »
I dare you guys to short it.  ;)
My Portfolio: AMZN, PAGP, FSLR, OKE, PYPL, RHT, MSFT

peter1234

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Re: AMZN - Amazon.com Inc.
« Reply #559 on: July 24, 2014, 08:54:50 PM »
Maybe AMZN is just going to lose a very little bit of money on each sale...

BUT

They are going to make up for it by doing VOLUME!

You are obviously not a believer.
 ;D

I appreciate and understand the bull case but would like to see evidence.

Being such a large cap that needs to compound at double digit rates over a long term just makes it a tough proposition.
 ;)