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Tickerguy
Posts: 150415
Incept: 2007-06-26
A True American Patriot!
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You're new here, so I'll simply point out that this isn't a "Short this or go long that" site.

And whether Amazon is self-financing (it is) isn't the point. The point is that they're subsidizing a money-losing business (selling physical goods) with a high-margin, money-making business (AWS and, to a lesser degree, perhaps their other service offerings like digital music although the latter is impossible to break out with the intentional obfuscation of detail the firm engages in.)

That's how they "do it", and how they're "Amazoning" various retailers. I argue it's illegal too, but then again nobody cares -- just like they don't care when you are screwed out of a house payment every single month by a medical system that operates in open collusion, obfuscation and even extortion without a single peep out of the government that is supposed to punish those behaviors.

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Winding it down.
Tickerguy
Posts: 150415
Incept: 2007-06-26
A True American Patriot!
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Quote:
"Cost of sales" is specifically defined in the 10-Q as "the purchase price of consumer products, digital media content costs where we record revenue gross, including Prime Video and Prime Music, packaging supplies, sortation and delivery center and related equipment costs, and inbound and outbound shipping costs, including where we are the transportation service provider. The increase in cost of sales in absolute dollars in Q3 2017 and for the nine months ended September 30, 2017, compared to the comparable prior year periods, is primarily due to increased product and shipping costs resulting from increased sales."

@Rsdmems Sure it is. You're rather credulous, by the way, which is exactly what people such as Bezos like.

May I point out (again; it's in the article) that gross sales were up 16%. Fulfillment costs were up 35%.

The problem with arguing that it's "primarily from increased sales" is that this would require double-counting. That's not happening, by the way, because in accounting the one rule you don't break (or you can go to jail) is that the numbers have to add up at the bottom of the page. Keeping two sets of books is one way people try to game that and it's also how they go to jail once in a while. I therefore assume that's not going on unless there's very good reason to believe otherwise.

HOWEVER, exactly HOW you silo costs is very fluid and is not illegal, especially if a function is shared between lines of business. This is where the game gets played. Further, it's an almost-100% discretionary decision by corporate management exactly HOW MUCH detail to report in the quarterly filings. It is perfectly legal to report "Gross sales, operating costs, profit/loss" as three line items and be done with it, just as it's perfectly legal to have a "conference call" that is nothing more than a pre-recorded statement -- or no call at all!

Exactly how a so-called "public company" can be evaluated by a person thinking of investing in same when you can't see the ****ing balance sheet, say much less the cost and income statements, is a question that nobody gives a flying **** about. It used to be that you didn't NEED any sort of regulation on this because firms considered that being public meant their OWNERS (that is, the stockholders) had a RIGHT to that data.

Not any more. Now we get sort of garbage Amazon reports, and they're hardly alone. Never mind companies like Face**** that report "reachability" numbers that EXCEED THE NUMBER OF PEOPLE. It used to ALSO be the case that reporting a LIE was considerable actionable in some form or fashion and the government would come after your ass.

Not any more as long as the stock price goes up.

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Winding it down.
Rollformer
Posts: 59
Incept: 2013-02-13

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Regarding the detail in the 10-Ks and 10-Qs, a lot of that is not necessarily for the investor, but for the competitor.
Ktrosper
Posts: 3303
Incept: 2010-04-06

ft collins co
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http://www.motherjones.com/politics/2012....

In a very real way, this ~20% loss bull**** forces competitors to go down this slavery/warehouse model if they are even going to try to compete, right?

That article I just posted made me sick. WTF have we come to?


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The unexamined life is not worth living.-Socrates
The only stable state is the one in which all men are equal before the law.-Aristotle
Liberty exists now in the spaces government has not yet chosen to occupy.-Doc Zero
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Jfms99
Posts: 220
Incept: 2009-10-06

Msumelle, Ar
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I just checked on Morningstar and while Amazon doesn't have a lot of debt they did sell bonds to finance the Whole Foods deal. So it looks as though they have about $25 Billion in outstanding bond debt. They may be going to the debt market ore to finance their expansion like into the pharmacy business and other things.
Tickerguy
Posts: 150415
Incept: 2007-06-26
A True American Patriot!
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Quote:
In a very real way, this ~20% loss bull**** forces competitors to go down this slavery/warehouse model if they are even going to try to compete, right?

That article I just posted made me sick. WTF have we come to?

Yep....

Quote:
I just checked on Morningstar and while Amazon doesn't have a lot of debt they did sell bonds to finance the Whole Foods deal. So it looks as though they have about $25 Billion in outstanding bond debt.

They have basically zero retained earnings to buy things with (that's called "cash") because they run on tiny margins which they allegedly "reinvest."

So to do a deal they have two basic options (along with various permutations of them):

1. Find someone who will take stock instead of money (which they can issue with impunity, it appears) for the transaction. When you have a company that has a 100+ P/E this is a major problem though because deals like that always have some sort of lock-up period, which exposes the seller to INSANE amounts of risk (like the amount they "get" for their company could EASILY be cut in half -- OR MORE!)

2. Sell debt to get money. This of course is made much easier by a Fed that is making debt sales very close to cost-free.

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Winding it down.

Aztrader
Posts: 7869
Incept: 2007-09-10

Scottsdale, AZ
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Wall street has literally subsidized Amazon simply by running their stock to the moon. When they missed earnings last quarter by 99 cents, the stock initially went down and quickly rebounded. For the past quarter, it never did much because the street was looking for direction. I know how bad the retail business was in the last quarter, with margins getting killed and sales drying up.
It seemed that they under reported last quarter to bring the shorts in for this quarter, then hit them hard with their IBM type earnings beat.
We know that the general public is tapped out and can't take on anymore debt.
The SEC has literally ignored phony earnings and allowed every one of these companies to make up **** as they go. Without stock buybacks, most of these high flying stocks would have missed earnings every quarter.
There is no longer value anywhere and the whole thing is no better then playing a fixed lottery.
Goforbroke
Posts: 7111
Incept: 2007-11-30
A True American Patriot!
Drain the Swamp!
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And meanwhile they have companies like Krogers scrambling ... our local store (which has a virtual local monopoly on groceries in our rural area) is spending 3 months and I don't know how much in capital outlays to totally revamp its store with higher-end (i.e. higher margin) goods ... which won't sell with this clientele. Apparently it's the pilot site. Based on customer ire and subsequent attrition to the Meijer in another city 25 minutes away due to the inconvenience of the constant reshuffling of stuff from one aisle to another on a daily basis (shopping has become a scavenger hunt), I think it's going to backfire on them.

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Our deepest fear is not that we are inadequate. Our deepest fear is that we are powerful beyond measure. It is our Light, and not our Darkness, that most frightens us. -- Marianne Williamson

Eleua
Posts: 15135
Incept: 2007-07-05
A True American Patriot!
N 47.72/ W 122.55
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It is my belief that GS and JPM went into talks with Congress back in September 2008 and essentially extorted the $700B from the US Treasury. It is my theory that they said something along the lines of, "Either give us the money to service this bad debt, and back it by a .gov guarantee, or we will sell it all into the market and crash the entire financial system."

The government blinked.

How much do you think prosecutors look at something like AMZN and say, "If this pig crashes, and we cause it, the entire market will tank and destroy our financial system."

Do they not prosecute for fear of how precariously balanced our bull**** market is?

I agree that the long term interest is to rid the system of such practices, but the short term will be catastrophic.

As Bill Fleckenstein said over a decade ago, "Once you start blowing bubbles, you have to keep blowing."

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"My object in life is to dethrone God and destroy capitalism." - Karl Marx
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Aztrader
Posts: 7869
Incept: 2007-09-10

Scottsdale, AZ
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Amazon is starting something new. They are offering 3rd tier sellers the PRIME system if the seller buys the label from Amazon for the 2 day shipping. I see a couple of problems with this.
Shipping 2 day air will be expensive and cut into the profits even more.
The vendor in most cases will have to drive the package into their local Fedex/ups store increasing the hassle even more.
The vendor will be required to take back any returns eating the shipping both ways.
There is too much risk here for most vendors. Amazon is obviously getting heat to increase their Prime offerings, but don't want to take the inventory risk.
Gauntlet33
Posts: 35
Incept: 2009-03-30

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"My business model right now for Blue Origin is I sell about $1 billion of Amazon stock a year and I use it to invest in Blue Origin," Bezos said at the conference, according to Reuters. Last year was the first time Bezos actually sold this much stock, selling two million shares of Amazon worth $1.4 billion pre-tax."

Translation: He's screwing Amazon shareholders, who are consensually buying even though he's selling...

https://www.forbes.com/forbes/welcome/?t....
Gauntlet33
Posts: 35
Incept: 2009-03-30

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Hi Karl, I'm a newbie to this so please excuse my ignorance, but speaking of websites and hosting, I will be starting my own business and need to register a domain and design my website. Is that something you do and I could pay you for? Or if you don't, could you point me in the right direction? Many thanks!
Ckaminski
Posts: 4285
Incept: 2011-04-08

Mass-Hole!
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Quote:
And meanwhile they have companies like Krogers scrambling


Krogers needs to look long and hard at what Marketbasket is doing in New England. As far as I can tell, the company has pretty much done debt free expansion, and the rumors I hear from employees is that the debt the owners took on to buy the company outright a couple years back has pretty much been paid back (this is gross rumor - heard 5th hand from angry pixies, so take it as you will).

And they're still the cheapest place to buy groceries by a long-shot. People will drive incredible distances to go to Marketbasket. I can fill two carts at MB for the price of one at Shaws or Stop and Shop.

But the newer Marketbaskets all have decent kitchens and clean delis, cheap coffee and a small cafe area - always clean. But still the same cheap, value-laden food.

Save $50m, then open a new store. In a business with margins in the 1-3% range, don't take on too much debt.
Lenguado
Posts: 2162
Incept: 2010-01-12
A True American Patriot!
Orlando, FL
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Well, I know a sure fire way to tank Amazon stock. Hasn't failed yet.

I'll purchase ~100 shares.

Guaranteed that within about 2 weeks I can have that stock price at least 50% less than what it is today!

/only partial SARC . . .

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I just realized... they aren't saying, "Keynesian Economics"
they're saying "Kenyansian Economics". Grass Huts for everyone!
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Welcome to historys first Double Dip Depression
Tickerguy
Posts: 150415
Incept: 2007-06-26
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@Gauntlet33 I don't do web development and such anymore.

I do like GKG for domains tho.

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Winding it down.
Gauntlet33
Posts: 35
Incept: 2009-03-30

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Thanks for the reply Karl! I wish you were still in that business...I'd like to make sure that I can trust the the person I'm working with. I know you're "shutting it down" as you say, but hope you let me know if you change your mind.
Aztrader
Posts: 7869
Incept: 2007-09-10

Scottsdale, AZ
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Amazon is the cause of this and it will take them down.........

https://finance.yahoo.com/news/online-re....
Spence
Posts: 3229
Incept: 2009-09-11

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Sorry for previous post attempt, finger slipped....


Aztrader wrote..
Amazon is the cause of this and it will take them down.........

https://finance.yahoo.com/news/online-re....]

That article is about customer returns mostly about people who changed their minds.

I've had two recent frustrating problems with Amazon 3rd party sellers. I'm a bicycle enthusiast, and do my own tweaks and upgrades. Within the past 2 weeks, first I bought a new bike from 3rd party vendor, ordered size medium and was shipped a small! You had one job, send medium! No you sent small. smiley So I have to go to the hassle of repacking the bike and cramming in my car and going to the UPS store.

Then I ordered another part for one of my bikes from a 3rd party seller and it arrived today. There were 2 choices to order, 50mm or 30mm. I carefully measured 3 times with my calipers and ordered the 50mm part. Today I received the 30mm part. smiley What is wrong with these sellers, are they stoned or just illiterate? Crap now I have to repack it and send it back and wait a week for a refund.

I sure miss the days of brick and mortar.
Chemdude
Posts: 2
Incept: 2017-08-29

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Related, but in Australia "Amazon allowed by law to undercut Australian businesses: regulator" (http://mobile.reuters.com/article/amp/id....
Ckaminski
Posts: 4285
Incept: 2011-04-08

Mass-Hole!
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I had a conversation with my dad last night (current and former e-tailer and manufacturer).

Shipping is killing small business. Companies like Amazon get a rate 20% that of small shippers. There's no way to compete on the internet if you're not going through one of the brokers (ebay, amazon, walmart).

Nevermind competing with China, who gets preferential treatment. A 2 kilo package from China for about a $1? I couldn't ship the same thing across town for less than $20.

> Then I ordered another part for one of my bikes from a 3rd party seller and it arrived today.

I walked into a bike shop looking for replacement shifters for an old bike. Or even deraileurs. They only thing they had in stock was a $500 shimano kit. I needed a $20 pair of shifters. A brand new bike would cost me less. There's no spare parts market ANYWHERE anymore because almost no one fixes anything anymore.
Nickdanger
Posts: 670
Incept: 2011-06-12

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Quote:
Shipping is killing small business. Companies like Amazon get a rate 20% that of small shippers. There's no way to compete on the internet if you're not going through one of the brokers (ebay, amazon, walmart).

No lie about the shipping charges! I have a garment distributor that charges between $16-19 to ship ONE garment to me if I have to replace something on an order. I know they are getting substantial discounts, but are charging retail plus a "handling" fee. I try to purchase as little from them as possible. In fact, it has gotten so bad, that I encourage folks to bring me their items rather than furnishing them due to the horrible shipping charges I have to pay if I place the order.

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Grammar: the difference between knowing your **** and knowing you're ****.
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