Message #143 From:
Jason Date: April 13, 2009 08:51:43 AM
Great Post From Yahoo About Amazon Earnings!
I am very concerned that one of your main go-go can't miss holdings,
AMZN, is about to crash after it reports earnings this October 22.
I believe AMZN will crash as the way I see it there is a great
likelihood it will miss. I also believe AMZN's estimates are too high
and they will be forced to cut top line and bottom line numbers due to
currency headwinds, shipping cost inflation, and a general pull back in
consumer sales that grew worse toward the end of the last quarter.
AMZN bulls like yourself and GS are dreaming if they believe a
discretionary consumer retailer that mainly sells tiny margin products
like books, discs, and electronic gizmos warrants late 1990s valuation
ratios is absurd. And more so given the widely accepted belief that
AMZN has always used very aggressive accounting assumptions and
estimates to massage their numbers which will finally catch up with
them this quarter.
At any rate a wise and savvy Templeton/Buffett-like investor like
yourself is well aware of these risks. It is also disconcerning that
your other seemingly teflon technology investments in EBAY, GOOG and
YAHOO have imploded already and are down in excess of 50% from their
highs.
I draw absolutely no comfort in the fact that in your earlier letter
communications with shareholders that you claimed these companies were
selling 30% below their intrinsic values. This also raises the question
of how do you know what their intrinsic values are when their earnings
streams are unknown and could easily be forever altered due to changes
in their competitive landscape, as historically always been the case in
the fast moving world of NASDAQ stocks.
At any rate, getting back to AMZN. I seem to be confused still in how
their business model provides any real competitive advantages when
their margins are tiny and shrinking and every other retailer has their
own web site. And any cash float AMZN earn seems to be 50% less
valuable now given the low interest rate environment we are going to be
in for some time now. The consumer retrenchment will be brutal, even
for AMZN it appears.
The AMZN debacle did work out well for Bezos as he cashed out billions
in stock options while clueless money mismangers supported the whole
charade with Goldman Sachs earning plenty of fees from all the AMZN
financing deals. In fact some even bought yachts from the charade!
My adivce to you if you want to have any minimal chance of saving your
job at LEGG is to sell AMZN first thing this morning on any strength.
No thanks are needed. Perhaps we can get together on the boat sometime though?
