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Amazon Makes a Profit 311

sofar writes: "Amazon finally makes a profit. Well, only $ 5mln, but maybe you can actually earn something on your stock now. At 1c a share it's no pension fund in Florida yet." I wonder how much of that profit represents 1-click licensing fees.
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Amazon Makes a Profit

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  • by AmbivaLence ( 553056 ) on Tuesday January 22, 2002 @06:55PM (#2884779)
    Hell has finally frozen over... Good day.
    • by SilentChris ( 452960 ) on Tuesday January 22, 2002 @07:17PM (#2884955) Homepage
      ...and thank freaking God for that. Hasn't anybody else been the least bit scared at the lack of Internet growth lately? For years I told friends that I was proud to be part of this new technology, whether it be a cornerstone of the economy or not. However, these past two years I've kind of shrugged off the comments "Bet that Computer Science degree is worth a bunch now!"

      All it took was some good old common sense. Stop spending money you don't have. Price-cut, but don't price-cut to the point that you knock your company out. Lay off the cheap sock-puppet gimmicks.

      The analysts are wrong: it is a new economy. It's just that the same old rules still apply.

      • by King_TJ ( 85913 ) on Wednesday January 23, 2002 @12:41AM (#2886271) Journal
        Well, yeah - I basically agree with you.
        I've been into computers long before the Internet became popular, and I've invested far too much time and effort in this field to just give up on it because of a digital version of the California gold rush.

        As long as those of us truly interested in and dedicated to I.T. stick out these "knee-jerk reaction" times, I think things will get back on track sooner, rather than later.

        It's the big investors who got burned on the dot-com fiasco, so of course they're the ones out there now proclaiming that "The new economy didn't exist!" and "The next 10 years of the stock market will be driven by industry, brick-and-mortar stores, and traditional service providers." In their minds, it's the only outcome they're comfortable seeing.

        The fact is, the Internet is growing up. We're quickly moving from the "wild, wild west" of Cyberspace to a more governed and commercialized space, where the "real world" reaches out and hangs a virtual hat. This also means that after the fallout from the craziness ends, we probably won't see fast growth like we used to see. Instead, we'll see small profits here and there, and a lot of failed commercial sites - paralleling the real business world.

        Although I used to criticize Amazon.com for "dabbling" too much (seemed like Bezos wanted to sell everything under the sun, until of course, a particular item didn't pan out so well for him), I think his persistence at selling his core line of products (books and media) is starting to pan out.
      • Agreed this is good news and needs to be communicated as such. A business with a sound business case and strategy will prosper. This is true irrespective of been a dot-com or not.
        Hopefully we will now see the VC's been prepared to fund new start-up's which:
        a: Have a real/realistic business case for generating revenue and growth.
        b: That have realistic timescales to achive these targets.
        Slowly, just slowly I believe that we are emerging from the dot-com mania fall out and returning to a more ratonal age for the perception of web based business based on business fundamentals.
  • Isn't this... (Score:2, Redundant)

    by NecroPuppy ( 222648 )
    A sign of the Apololypse?

    Like AOL/TW suing, say, Microsoft?

    Oh, wait...
  • by Mahtar ( 324436 ) <aborell@gmail.com> on Tuesday January 22, 2002 @06:55PM (#2884785)
    At 5c a share it's no pension fund in Florida yet

    No, but I hear Enron is looking for buyers.
  • by kitts ( 545683 ) on Tuesday January 22, 2002 @06:56PM (#2884790) Homepage
    Of course, if you gave me billions of dollars in venture capital I could probably find a way to give you back $5 million too.
    • A lousy bank account would beat that. The question is, how many DECADES will it take for them to get above a 3% increase?
    • Re:Congratulations! (Score:2, Interesting)

      by jimrandall ( 553083 )
      Although it seems obvious that anybody can take billions of dollars and create five million out of it, amazon.com's accomplishments are being overlooked. Their main goals in pumping the billions of dollars into their venture was in fact at the time to control marketshare, and knock out competitors. As the dot-com craze slowed down they realized that they were dominating their market, and could begin cutting back. Also, Amazon.com not only surpassed wall st's expectations, but in fact their own. Of course, upcoming quarterly reports may tell us otherwise, or prove that amazon.com is fueling a money engine in hopes to not only dominate their market, but to also pay back the venture capitalists.
      • Re:Congratulations! (Score:2, Interesting)

        by jsprat ( 442568 )
        Another accomplishment that shouldn't be overlooked is the 1000's of jobs that Amazon creates in an otherwise bleak Seattle economy.

        Given 5 billion dollars and a 3% interest bearing bank account, there would be _no_ impact on a local economy.
        • Re:Congratulations! (Score:2, Interesting)

          by MindStalker ( 22827 )
          Not true, because that bank would use that money to makne loas, many of which would be local buisnesses. How else do you think that bank would get the 410 thousand dollars a day it would have to pay in interest. (No single bank would allow you to deposit that much btw, specially not at one time, they simply couldn't handle it) But thats another story.
          • No single bank would allow you to deposit that much

            Apparently they don't have form letters to handle it.

            Yeah. I just received a "Loan Rejected" form letter, but they had to scribble out "Loan" and write "Deposit" in by hand. Apparently they haven't pre-printed the proper form letters.

            -
  • Despite their lame patents, Amazon is still one of the best places to get books on the internet. Part of their sucess could be their dealings with brick and mortar stores, like Borders [borders.com]. I also like the fact that I can pick up music that I can't find elsewhere like (quick plug) Dispatch [dispatchmusic.com]. I'm glad this recession doesn't have them belly up.
    • Re:Great! (Score:5, Insightful)

      by 2Bits ( 167227 ) on Tuesday January 22, 2002 @07:08PM (#2884886)
      [DISCLAIMER: I own Amazon stock, and I still believe that a company that provides good customer services can't be bad, so I'm holding onto it]

      Agreed.

      As much as I hate about their one-click patent, Amazon is best place for books and other stuffs. Their recommendation feature is excellent. I found out a lot of authors that I would have known otherwise. And the service is first class. If only other companies would care so much about service quality too....

      Sure, Amazon has been losing tons of money, but you have to give credit to the company for very good forcast of their target. They have been very good at being on the mark in the past.

      Now, if Jeff Bezos commits to more consistent customer privacy policy, I would be a really happy customer (and shareholder too).
      • Re:Great! (Score:2, Interesting)

        by Galahad ( 24997 )
        So what about the 1-click patent? Who cares? It's not Amazon's fault that the PTO is criminally unaware of reality. Don't blame Amazon for what the system makes available. They looked around and did what they could to protect their IP and their business.

        I shop at Amazon, I recommend Amazon to friends and family because they are certainly best of breed.

        Congrats, Mr Bezos. BTW, how long does it take to get from your office to the loading dock on your new Segway?

    • by pigeonhed ( 137303 ) on Tuesday January 22, 2002 @07:15PM (#2884931) Journal
      So what is the cost to you for that good book service. Amazon's patents are exactly why I do not order from them. I did order from them alittle over two years ago and yes they are excellent at what they do. That said, noway am I buying from them. There agressive patent tactics leave me feeling dirty when at there website.

      Just my view.
      • I agree wholeheartedly. This web site is full of people spouting about how to change things, but when it comes to speaknig with $$'s most folks can't bear a wee bit of inconvenience, so any sort of moral stand goes right out the window. I refuse to buy from Amazon, simple. Borders, Barnes&Nobels, Half priced books all get my business weekly but Amazon gets nothing from me.
  • Even if it is Amazon, it's good to see the .com model does produce profit.

    I just hope they didn't earn a profit from selling customer data, the infamous 1-click patent, and all the other dirty tricks.
  • Jaded? (Score:5, Funny)

    by The Good Reverend ( 84440 ) <michael@michris. c o m> on Tuesday January 22, 2002 @06:56PM (#2884793) Journal
    I wonder how much of that profit represents 1-click licensing fees.

    Jaded? Party of one? Your table's ready...
  • Porn (Score:5, Informative)

    by astrotek ( 132325 ) on Tuesday January 22, 2002 @06:56PM (#2884794) Homepage
    Meanwhile, porn sites have been making money since a text drawing of a tit was placed on usenet.
    • Re:Porn (Score:5, Interesting)

      by foo fighter ( 151863 ) on Tuesday January 22, 2002 @07:02PM (#2884848) Homepage
      Off-topic from article, but. . .

      The latest issue of Wired has an interesting article on just how hard it is to make money selling porn on the Internet. The market is saturated, so new-comers are pretty much shut out.

      Even the old dogs are having a difficult time making money. When sites like drbizzaro.com and its partners give away so much product for free, you have to offer a pretty compelling product, or cater to a very specific niche to make money.
      • Re:Porn (Score:5, Funny)

        by foobar104 ( 206452 ) on Tuesday January 22, 2002 @09:30PM (#2885585) Journal
        When sites like drbizzaro.com and its partners give away so much product for free...

        That sound you hear is the drbizzaro.com web server exploding into a gazillion pieces.
      • Well, it is harder, but it's still possible to make money. If you know what you're doing, and you bust your ass, it's very, very possible to make money in porn. The truth is, very few people do, because MOST of the people in the business are kids who throw up a few galleries and expect the money to come rolling in. But yet, certain sites (I'm not going to name names) do give out a LOT of free porn.
  • oh please (Score:5, Insightful)

    by ChannelX ( 89676 ) on Tuesday January 22, 2002 @06:56PM (#2884796) Homepage
    I can't believe people. Amazon posts a profit for the first time (and on a reasonable time schedule in the real world) and then someone complains that it's not a big enough profit. What did the submitter expect? a 1-billion dollar windfall? considering the state of the US economy at the moment the fact that amazon made a profit is even better.
    • Well, there is the fact that they should never have been losing money at the first place and in fact were only losing money because instead of being happy selling books and movies where they could turn profits their idiot management decided that they should sell everything on the planet, from lawnmowers to barbeques, to furry handcuffs or whatever the hell else they were selling at the height of their product line expansion. Their business model(like the web business model) works very well when selling things like books and movies where you can provide a huge selection and a brick and mortar cannot. However, it doesn't work when you can pick up the same item at the same price at a local store - cause thats what most people will do every time.
    • considering the state of the US economy at the moment the fact that amazon made a profit is even better.

      Ironically, the $5mil can be traced back to surprisingly strong sales of "How To Find A Job In A Struggling Economy... For Dummies!"

  • Darn... (Score:4, Funny)

    by Mike Schiraldi ( 18296 ) on Tuesday January 22, 2002 @06:57PM (#2884800) Homepage Journal
    I would have submitted this first, but i was hit by a flying pig on the way to my computer..
  • by jayhawk88 ( 160512 ) <jayhawk88@gmail.com> on Tuesday January 22, 2002 @06:59PM (#2884819)
    What's with all the hell freezing over cracks? Is it really so difficult to believe a retailer would eventually turn a profit?

    Or all we all just amazed that at least one DotCom company had a solid business plan, stuck with it, and now has something to show for it?
    • It's just hard to stick with it when you're bleeding 50 million dollars a year. I'm sure all those dot-bombs would still be around if they didn't run out of money.
    • Amazon had a solid business plan, yes. It said "We're going to sell books, cheaper, and offer a wider selection". And they got caught up in the dot com craze, and decided to go with a lot of business plans that were a lot less sound, like selling garden tools and hibachi grills where they had no conceivable advantage over a brick and mortar. And as a result, hemoraged cash like every other dot-com on the planet. Really, most of their uppermanagement from a year or two ago needs to be prevented from breeding.
    • The fact remains that this got posted today, not because the news was released today, but because its Tuesday. On Tuesday, Thursday, Saturday, and alternating Sundays, we're pro bigbusiness, pro-DVD, pro patent, for stricter internet law, and pro linux takeover. On Monday, Wednesday, Friday, and alternating Sundays, we are anti-internet-law, anti-patent, anti-DVD, pro-freedom of speach, and anti-linux buyout.

      ~z
  • by Shoeboy ( 16224 ) on Tuesday January 22, 2002 @07:00PM (#2884825) Homepage
    Just because Amazon turns a slight profit doesn't make your stocks worth anything.

    In addition to raising money through sale of stock, Amazon has also raised money by selling bonds. Lots of bonds. The ammount of securities debt Amazon is carrying is far more than the total value of the company.

    Now for the fun bit: when push comes to shove, bondholders get paid before stockholders. Always. The people who loaned the company will get paid back before the people who bought part of it. Now it's worth noting that the securities amazon.com has issued are trading at very low rates. They're junk bonds. The market thinks there's a good chance that Amazon will not be able to cover the interest payments on those bonds in the long term. If that happens, the shareholders get $0.00 from any sale of assets.

    This makes Amazon.com a risky buy. Not as bad as VA Software, (people find Amazon's services useful afterall) but still risky.

    --Shoeboy
    • Just picking nits here, but if the bonds are truly trading at low rates, then they're not junk. Junk bonds have much higher than average return rates because that's what the market demands of the company to loan them money. If the company is a high risk, then they have to pay a higher return. High enough risk and they're termed "junk bonds."
    • When you calculate the value, technically speaking the enterprise value, of a company you take the value of the equity and add the amount of debt. Therefore, the value of Amazon would be the sum of its present market capitalization, US$4.6B, and its long term debt, roughtly $2B, providing an enterprise value of $6.4B.
      Just because Amazon has a substantial amount of debt does not really mean all that much. Assuming that they remain profitable and cash flow positive, Amazon could well continue as the preemminent electronic commerce company for a very long time. The current market conditions have created substantial barriers to entry for new competition.
      I am not saying that Amazon is a sure thing as a company, they have some rather creative accounting among other things that could spoil the party. As a growth stock it should have more risk than more slowly growing companies like Nordstrom or Federated Department Stores. At the same time, the company has consistantly achieved success against great odds and remained out of chapter 11, even as more established enterprises like K-Mart, Montgomery Ward or even Enron have hit hard times.
      If you want to avoid all risk, you should probably stick with treasury bills.
    • The amount of securities debt Amazon is carrying is far more than the total value of the company.

      The debt is accounted for in the "value" of the company's stock and, therefore, the value of the company. Remember, the debt raised is used to finance assets...it is not raised for nothing. It could be easily argued that the burden imposed on profitability by the amount of interest repayments made each year is more important than the nominal amount of debt on the balance sheet.

      Now for the fun bit: when push comes to shove, bondholders get paid before stockholders

      Erm...of course they do. Stockholder = owner. You are implying that a business owner may borrow money, and when things go wrong he should get the cost of his investment back before he repays external creditors. For example...I buy a store for $100 and borrow a further $100 from the bank to purchase inventory etc. Business is bad, inventory devalues, and my business fails. You think I should get my $100 back before the bank gets theirs? Obviously not.

      the securities amazon.com has issued are trading at very low rates

      The "rates" paid on bonds are, as someone else pointed out, related to the perceived risk in owning the bonds. If I were to choose to invest in a risky company, I would expect a higher rate of interest to compensate me for assuming a higher degree of risk. Alternatively, I could invest in a more financially stable company and get a smaller return.

      The market thinks there's a good chance that Amazon will not be able to cover the interest payments on those bonds in the long term...This makes Amazon.com a risky buy

      Risk is relative. Risk = uncertainty/volatility of financial return (amongst other definitions). And if the market as a whole thought that there was a realistic chance that Amazon couldn't service debt going forward, the company's stock would be worth basically nothing. There will be winners amongst the dot coms; Amazon is more than likely to be one of them.
  • Linux saves Amazon (Score:5, Interesting)

    by Spy Hunter ( 317220 ) on Tuesday January 22, 2002 @07:02PM (#2884845) Journal
    And they have Linux to thank for it [com.com]. According to this article Linux saved them $17 million. Therefore, if it wasn't for Linux, they'd be losing $12 million and they wouldn't have been able to keep their promises to Wall Street.
    • Well, I guess my post wasn't entirely accurate. The $17 mil wasn't all due to Linux (though Linux was cited as the primary reason) and the savings was for last quarter, not this quarter (although there should be a similar savings for this quarter). It's still a victory for Open Source software though. Go Linux!
  • by HEbGb ( 6544 ) on Tuesday January 22, 2002 @07:05PM (#2884867)
    I'm not impressed at all by a company that has had to spend several billion dollars to make a profit of $5 million. First of all, $5 million is peanuts, and the stated profit takes none of the infrastructure expenses they've been making for the last several years.

    If I spend $10 billion on a factory one year, and make $5 million the next year after operating expenses, am I profitable? No way. Not until the $10 billion factory is paid for.

    There was also few details given about the expense exclusions that have likely been included in the calculation. Let's see what the SEC filings have to say (they're not out yet).

    And even still, a $5 million profit on a $10 billion+ investment is a pretty lousy return (rate = 0.05%).
    • by MeowMeow Jones ( 233640 ) on Tuesday January 22, 2002 @07:25PM (#2885010)
      and not an expense.

      Why? The factory is worth $10 billion dollars. Amazon could sell it if they had to. Then the factory depreciates over time and that's when the company can expense it.

      I agree that this is a shitty return, but there's a big difference between spending $10 billion on a factory and $10 billion on programmers salaries.
  • quantnum theory (Score:2, Interesting)

    by Narcocide ( 102829 )
    this is proof that in an infinite amount of time, the quantnum probability of anything happening is at least 1
  • From the article:

    Among other units, books, music and video remain Amazon's biggest sellers, ringing up revenue of $538 million in the fourth quarter, but sales growth was a mere 5 percent

    Electronics tools and kitchen sales were $216.6 million, down 2 percent from a year ago. Services sales were $98 million, up 3 percent.

    Not sure exactly what the "services" are (like everyone else, I hope it's not 1-click licenses) but this pretty much confirms what my gut told me: Amazon is good at selling books and media, but really lousy at selling everything else. I really hope that they realize this and get out of the TV's-and-lawn-chairs business. They're still a great place to buy books, but I've never bought anything bigger than about 1 cubic foot from them, and I'm pretty sure I never will.

    • They're still a great place to buy books
      why does everyone say this? I can get equal pricing at most book stores, get the book that day, and if there is a problem(not likely) I can get it taken care of that same day?
      The one thing that makes amazon something I would consider is that I can hace gifts deliverd right from them.
      of course, since there 1-click patent I don't buy anything from them, but I still don't see anything that cost+shippping is better then any number of bookstores around my home.
      • Try finding books here in Canada and you'll see how great Amazon is.

        Walking into any of the various Chapters/Indigo brick & mortar stores is totally pointless unless you're looking for the latest bestseller or Oprah recommendation (and note how many acres of space are devoted to selling candles, picture frames and other crap like that). Interestingly while they do have quite some selection, the 'best books' in every department seem to always be out of stock, and never replenished, while all the other non-selling crap obviously remains on the shelves.

        Ordering online from Chapters/Indigo is even worse, most things I am interested in seem to be always on 3-6 weeks shipping, while Amazon has ALWAYS, ALWAYS, ALWAYS had EVERYTHING I wanted on '24 hours' shipping (and it *did* ship in 24 hours).

        I also remember once ordering a book in a brick & mortar Chapters store, being quoted '2 months' and after about 1 *year* being told that the book went out of print in the meantime (and yes, I kept going there every other week to ask what was going on). Same thing happened trying to order an import CD from the Virgin megastore: they got all my data, told me 3 weeks, it's been 2 years and they still haven't gotten back to me...

        While ordering from Amazon is expensive for us Canadians (shipping ain't cheap, and 3 times out of 4 I get to pay duty/GST and PST on the things) it is really the only option if you really want something in a reasonable time frame.

        Now if only Amazon shipped *everything* to Canada (most/all toys/electronics/power tools/etc. are US-only) it would be even better, not to mention if they slashed the really expensive shipping charges on paperbacks...
      • I pefer half.com myself, almost any book, half price, heh.

        Hmm, is Ebay profitable? (do they take a certain % of each sale or something? How does Ebay make their profit? I know that Half.com takes like 10% of each exchange or something)

        Amazon DOES have a good selection though, and their prices are equal to major bookstore chains even after shipping (which is all that their 'discount' about pays for, heh, either that or look at is as sales tax removal, depending on your state though. . . . .)

        Being able to get older books in a series is also nice though, especialy since the larger chains typicaly only stock random bits and pieces of older books in a series, and sometimes I just don't want to wade through tons of old science fiction book stores. :) (though that IS one of my favorite habits, hehe.)

        For that matter that is one of the reasons that I really do not use amazon.com all that much, I just enjoy wading through piles of books, hehe.

        There is a book store in the Pike Place Market (Google it folks) that specalizes in old Science Fiction books and magazines, hehe, yah they cost a pretty penny (its painful paying $10 for a book that has "Only 25 cents!!!" on its original cover artwork but. . . hehe. They are worth it. :) :) :) ) but shoot the emotions that just digging through an old pile of books can give ya. . . .

        (well, at least those ones that aren't behind lock and key, heh)
        • by Anonymous Coward
          is Ebay profitable?

          Yes, they had a profit of $90.4 million [etrade.com] last year.

          do they take a certain % of each sale or something?

          Yes, among other things [ebay.com]
  • http://ars.userfriendly.org/cartoons/?id=19990406

    [scene: MS techie in moon suit, facing the perfect home for a new evil AI (in other words, an Arnold Shwartzenegger-type guy)]

    MS Techie:[thinking] How do I knock this guy out? He's positively huge. I don't even think a mallet would do him in.

    *thinks*

    Techie: I heard Amazon.com actually turned a profit this quarter.

    *whoomp* [Arnold faints]

    Techie:[thinking] Lies and damned lies...
  • How many internet companies (where it matters not to the customer where you are) do you think would have been doing much better if they had not headquartered in high-priced tech centers like Seattle and San Francisco?
  • by peter303 ( 12292 ) on Tuesday January 22, 2002 @07:26PM (#2885016)
    Greedy vulture capitalists distracted the contruction of internet commerce in the late 1990s. Finally a few companies are getting it to work properly.
  • Amazon's Future (Score:4, Interesting)

    by Metrollica ( 552191 ) <m etrollica AT hotmail D0T com> on Tuesday January 22, 2002 @07:36PM (#2885066) Homepage Journal
    There is a recent story here [washingtonpost.com] about Amazon's future.

    It talks about Amazon making its way to open real stores and even let customers order online and pick up their purchases at stores like Circuit City to save on shipping. Amazon has started working with its competitors by providing them with services instead of competing. Amazon is also going to provide e-commerce services to AOL subscribers starting next year.
    • That makes a lot of sense. Just as "the last mile" is a problem for broadband, it's also a problem for online retailers. The difference is that most people already own the necessary infrastructure--their cars and some spare time.

      If the "buy online, pickup at the store" model takes hold, this has all kinds of implications for the way distribution works, and what a retailer actually does. For one thing, it cuts into the revenue stream for delivery companies like UPS, who've been getting a shot in the arm from online retailing.

      I think this is the way things will eventually go. Shipping everything right to your door via UPS isn't efficient. Economic darwinism will ultimately scale that market back so that only those who truly want that convenience will pay for it.

      • If the "buy online, pickup at the store" model takes hold, this has all kinds of implications for the way distribution works, and what a retailer actually does.

        Booksense [booksense.com] (an association of independent bookstores) pioneered this over a year ago. (As well as a bunch of other cool features like gift certificates buyable online and redeemable online or inperson across the country.)
  • Used Items (Score:2, Insightful)

    by Ender77 ( 551980 )
    An Item that the article didn't mention was their used items. This is a very smart move by Amazon(and a direct rip-off of half.com) since all they do is list used items that people want to get rid of, Amazon gets a percentage of whatever a person sells and it costs Amazon $0.0X money.
  • by jamesmartinluther ( 267743 ) on Tuesday January 22, 2002 @07:38PM (#2885081) Homepage
    Yes, profits are always a good thing (when earned and honestly accounted for).

    But the big "straight numbers" problem with Amazon can be illustrated as follows:

    Quarter ending December 31, 2001
    Total assets $ 1,637,547,000
    - Total liabilities 3,077,547,000
    = Total stockholders' deficit ($1,440,000,000)

    Quarter ending Sep 30, 2001
    Total Assets $1,346,368,000
    - Total Liabilities $2,800,362,000
    = Total Stockholder Equity ($1,453,994,000)

    Would you pay $4.6B (about its current total market price) for a company that continues to be worth around $-1.4B? Take note that I am not accounting for "hope" and "prospects" here.

    If they double, triple, or even quantuple this quarter's $5M take, it will be a long time before Amazon.com can justify the enormous chasm between debt and assets. Amazon.com must have some seriously bright prospects to justify their market cap!

    The above fiancial data [yahoo.com] is based on SEC filings and is from the quarter ending Sep 30, 2001 and today's press release [yahoo.com] from Amazon.com.

    • Frankly, Gates could pluck a few billion from his pocket change, buy Amazon, and have a MAJOR strangehold over much of the commercial world. Not only that, but he gets tons of customer data for Passport.

      While Microsoft doesn't appear to want to get into the retail market what-so-ever, Amazon would make a great outlet for their gear.
      • I don't think Bill Gates would buy Amazon. Because they just migrated onto Linux, he would either face a new loss in migrating over to MS technologies, or he would have to live with owning a company saving cost by using Open Source software.

        It's basically a lose-lose situation for Bill Gates.

        For IBM, it could be interesting to invest in/run Amazon. They are putting a lot of effort and resources into Linux, and it would be nice to show to the world how Linux can be a good foundation for a profitable business.

        I doubt they will actually run it, but perhaps they could offer to deal with the technical stuff? It could certainly be valuable experience for all parties.
    • Amazon's P/S (1.23) is certainly higher than the brick & mortar book stores (Barnes & Noble 0.47, Borders 0.56), but that seems reasonable considering their massively lower overhead costs and need for inventory. You're also paying for the growth - they've come from nowhere to now have sales of the same magnitude as these two, and increased revenues by about 15% last year...

      You're still taking a gamble that revenue growth will continue, but that seems a reasonable gamble - not an outrageous overvaluation.

      All IMO, IANAL, etc.
  • ... are as follows ...

    1) amazon appear to have made a profit without anyone (or me at least) every receiving any spam from them (sure, i get occasional mailing list stuff, but i signed up for that when i created my account with them) ... see? you dont have to piss ppl off with unsolicited emails to try and make money. sometimes you can just work hard at it (and yes, patent and sell off stuff, but they arent the only business to do it, so GET OVER IT already)

    2) the news link in the article has what may be the worlds first html anchor of the phrase "pooh-poohed" ... i think this page should be archived somewhere for posterity. im pretty sure that even winnie the poohs personal website doesnt have that phrase on it.
    • 1) amazon appear to have made a profit without anyone (or me at least) every receiving any spam from them
      I have. Not directly from them, but I got spam addressed to an Amazon-munged address (shimpei+amazon@blah.com) that I gave to no one but Amazon, which means the bastards must have sold it.

      Admittedly, this was more than four years ago, and when I started buying from them again recently, I did not receive anything beyond a few ads from Amazon itself. But then again, I didn't bother giving out munged addresses this time, so I can't tell if they're still selling addresses or not.

  • by treebeard77 ( 68658 ) <<ten.draebeert> <ta> <draebeert>> on Tuesday January 22, 2002 @08:17PM (#2885305)
    disclaimer: unabashed fan of Amazon

    It's been mentioned how helpful Amazon is for those who don't live in an urban center.

    What is more notable is how many small presses Amazon has saved. It has given "shelf space" to small/speciality presses who couldn't get the back dusty corner in a mall store. Some time back, more than a year, I remember reading an article which contrasted Amazon's sales with typical brick & morter bookstores. B&M's sales are 80% best sellers, 20% "others". Amazon's sales were the reverse. Good for small presses, non-mainstream writers, & folks who don't live near specialty bookstores.
  • by linuxlover ( 40375 ) on Tuesday January 22, 2002 @08:28PM (#2885361) Homepage
    Anytime I need to read about book / dvd reviews, I head on to Amazon site.

    Sure they are not darling red-hat (one click patent and all), but they run a decent web site.
    • Yep, I absolutely love their website, and use it to research all sorts of things before I buy.

      Mind you I don't actually buy anything from them (that whole thing about them telling me they'll be selling my personal info to others, just not sitting well), but I do use their website alot.

  • I wonder how much of that profit represents 1-click licensing fees.


    None, I'd venture. If you measure the savings made by Amazon migrating (flocking might be a better word) to Linux, you'd more than equal $5m.


    Have a nice dividend (snigger).
  • Google, too (Score:5, Interesting)

    by RedWizzard ( 192002 ) on Tuesday January 22, 2002 @08:53PM (#2885447)
    According to this [smh.com.au] Google also made a profit, although since it's privately held they ain't saying how much. Also interesting is that they've only had $26 million in VC funding, and nothing since 1999.

    Since my article on Google's profit was rejected yesterday I can only assume Slashdot editors only care about the performance of dotcom companies they own stock in.

  • by Boiner ( 58993 )
    This is a Pro Forma profit, which is a nice (and legal) way of saying they've deviated from GAAP (Generally Accepted Accounting Principles) and done some creative accounting. CPA types will be glad to explain why there are several dozen ways to define $PROFIT.

    Please, check the footnotes...
  • Amazon has had a habit in the past of basically moving costs out of the last quarter of the year into other quarters, so their "Christmas" quarter always looks great (though this one looks a shedload better than their year-ago, that's for sure).

    Maybe somebody who owns the stock and actually pays attention to the financial statements (i.e., you didn't buy it at $140/share and are stuck with it now) can research this?

    Also pay attention to their HUGE debt. Poor debt management can kill a company, like KMart which filed bankruptcy today.

    Although I don't like Amazon because of the patents and the fact that Jeff Bezos is a clown (okay a little ad-hominem there, but making him man of the year was an embarrasment to Time magazine if you ask me), I'd hope they succeed because I love reading their great reviews before buying CDs and books from Barnes and Noble. :-)

  • by Anonymous Coward
    See this cartoon [userfriendly.org].

    Three years later...
  • If you read this article [nwsource.com] from the Seattle Times, it talks of Amazon.com's method of 'pro forma' accounting, which seems to be a pretty convenient way to hide expenses from the bottom line.

    I'm happy for the supposed turn for the better Amazon.com is experiencing, as much as I am for any bellweather Dot.Com. I'm just not sure I'd want to invest in them personally.
    • Congratulations! You're wrong.

      Seattle Times:
      On Tuesday, Amazon is expected to report what it calls a "pro forma" operating income, which excludes certain noncash items. Much ado has been made about "pro forma" accounting, a term not recognized by the Financial Accounting Standards Board, a group overseeing accounting rules.
      Or, analysts expect pro-forma accounting.

      News.com:
      Amazon reported net income of $5 million, or a penny a share, under generally accepted accounting principles, well ahead of analysts' expectations. Most analysts had predicted that the company would report a profit on a pro forma basis, which excludes a host of expenses and charges.
      Or, the analysts were wrong, they used generally accepted accounting principles.

      So the news here is that they not only made a profit, but did so by fudging the numbers no more than any normal accountant would.

      -transiit
  • Bringing in Arthur Andersen to do the books was the best thing Amazon could have done.
  • ...for the first time in 6 years. Somethiing must really be up!
  • by raldanash ( 451422 ) on Wednesday January 23, 2002 @06:08AM (#2887074)
    I know Amazon is trying to turn into a retailer-perhaps Walmart.NET or something, but let's focus on its core business-books. It does a good job there. It's changed buying habits all over the world. I mean, how many times have you guys gone online to see how well a book is reviewed? Granted, the system isn't perfect, but it's a hell of a lot better than reading the inside jacket (like I used to do before the NET).

    I don't know if Amazon is going to change the world as a retailer, but it has changed the way everyone buys books. Even if you don't buy directly from Amazon, people will often look at the online reviews and than going check out the book in more detail at B&N or Borders.

    I believe software is somewhat the same-though I generally don't buy a lot of MS stuff, when I do I check the reviews at Amazon. These are the sort of things where Amazon has developed a really good business model.

    If it every does go bankrupt, I expect that they'll just shed all the extra stuff and pair back to light and information oriented items like books and software, they can always make money and they already have volume.

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