Technology, Inc. (AMZN)

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From: FUBHO2/14/2012 1:19:18 PM
5 Recommendations   of 162589
Amazon is screwed - the Mistress of Disaster is on the Board:

Time to Short Amazon? Jamie Gorelick Now Onboard
February 13th, 2012 - 7:50 pm

What could go wrong? Just as I was ripping a few more CDs to upload to the Amazon cloud, comes ominous news indeed from Doug Ross that the “Amazon board adds Jamie Gorelick, former Fannie Mae and DOJ official.” That PR-style headline from Geek Wire hides the fact that, as Doug writes, “Gorelick is best-known for her leading roles in two epic, trillion-dollar catastrophes, which earned her the nomme de guerre ‘The Mistress of Disaster:’”

It’s not often that one person plays key roles in two — count ‘em, two — trillion-dollar disasters. Welcome, my friends, to the world of well-connected Democrat Jamie Gorelick.

You’ve been warned.

Third time’s the charm! Though if Gorelick does to Amazon what she did to Bill Clinton’s nascent non-war on terrorism and then to Fannie Mae, they’re in heap big trouble. Amazon has run roughshod over first Borders and then Best Buy — what happens to the Internet if the 800 pound gorilla of online retailing falls?

The two trillion dollar disasters would be:

1) The wall between intel and criminal investigation enacted during the Clinton administration:
A 1995 Department of Justice memorandum states that the procedures her memorandum put in place for the investigation of the first WTC bombing "go beyond what is legally required...[to] prevent any risk of creating an unwarranted appearance that FISA is being used to avoid procedural safeguards which would apply in a criminal investigation." The wall intentionally exceeded the requirements of FISA (the Foreign Intelligence Surveillance Act of 1978) for the purposes of criminal investigations, as well as the then-existing federal case law. These rules were, shortly after their creation, expanded to regulate such communications in future counter-terrorism investigations. (wikipedia)

2) Mismanagement of Fannie Mae:

Even though she had no previous training nor experience in finance, Gorelick was appointed Vice Chairman of Federal National Mortgage Association (Fannie Mae) from 1997 to 2003. She served alongside former Clinton Administration official Franklin Raines. [7] During that period, Fannie Mae developed a $10 billion accounting scandal. [8]

On March 25, 2002, Business Week interviewed Gorelick about the health of Fannie Mae. Gorelick is quoted as saying, "We believe we are managed safely. We are very pleased that Moody's gave us an A-minus in the area of bank financial strength – without a reference to the government in any way. Fannie Mae is among the handful of top-quality institutions." [9] One year later, Government Regulators "accused Fannie Mae of improper accounting to the tune of $9 billion in unrecorded losses". [10]

In an additional scandal concerning falsified financial transactions that helped the company meet earnings targets for 1998, a "manipulation" that triggered multimillion-dollar bonuses for top executives, [11] Gorelick received $779,625.

Investigation by the OFHEO detailed in their official report on the accounting scandal in 2006 on page 66 that from 1998 to 2002 Gorelick received a total of $26,466,834.00 in income. (also wikipedia)

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From: Road Walker2/16/2012 10:05:08 AM
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Amazon (AMZN) Drops; Morgan Stanley Cuts to Equalweight, Cites Competition from Apple (AAPL)
9:47 am ET 02/16/2012 - Street Insider
Amazon.Com (Nasdaq: AMZN) is taking a hit Thursday following a downgrade at Morgan Stanley.

The first lowered its investment rating from Overweight to an Equalweight, cutting its price target 13.6 percent from $220 prior to $190. Despite the lowered target, Morgan Stanley said it would be a buyer as share approached $150, a single multiple of expected 2012 net sales.

Morgan Stanley cautions that 2012 will be a tough year and investors will get the full just of this when it holds its first-quarter conference call. The call will give sales guidance for the second-quarter which will be facing tougher comps (up 44 percent) compared to its first quarter numbers.

First-quarter sales should have easier comps given a 500 basis points impact from the earthquake/tsunami in Japan last March.

Key points to deceleration of revs include:Apple (Nasdaq: AAPL) having a significant impact on Amazon's EGM segment;

Apple and other driving a meaningful shift in the Media sector, putting pressure on Amazon's non-book media business;

Video games are entering a cyclically weak period;

The transition to 3P / FBA is being driven partially by the transition of eBooks to net sales accounting and while positive long-term, we do not think physical goods 3P is growing as fast as some investors believe; and

Slowing sales growth and an overall shift to more 3P and digital goods may change the dynamics of working capital, a significant component of consolidated FCF that most investors currently capitalize at the same multiple as s operating FCFIn EGM, Amazon reported North American sales growth of 27 percent in the fourth-quarter, from 44 percent in the third-quarter last year. Amazon doesn't have a license to sell Apple's iPhone and iPad devices, leaving it with a gap in its electronics portfolio. Morgan Stanley notes: "the EGM deceleration is more significant [than Media] since it is the segment that investors expect the most share gains from over time."

Further, Morgan Stanley is weary on Amazon's non-books media business, but believes Amazon will spend as much as necessary to gain top spot in the digital segment. The firm commented, "The books category has already been a huge success and given the media war that is now fighting to sustain its media business through the digital transition, we think will spend as much as it needs to in video to win top-spot within the second media category. With that said, we are incrementally negative on Netflix (Nasdaq: NFLX) as we believe has competitive strengths that could aid in its war for video market share, namely its video streaming delivery infrastructure and its large, engaged customer base...Net / net, Apple is a problem for and the first / second derivative impacts will drive to continue spending aggressively for an extended period in the areas of discounted hardware devices, acquiring content, etc to sustain its competitive position within the media category."

Amazon shares are down 4.7 percent early.

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From: Cisco342/17/2012 4:47:08 PM
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Amazon fulfillment analysis and IP.

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From: Glenn Petersen3/4/2012 12:22:39 AM
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A high profile loss for AWS:

Message 27988469

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From: ChrisGillette3/10/2012 2:50:20 PM
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For anyone (like me) curious about the number of Amazon Prime subscribers...

Amazon Is Said to Have Fewer Prime Members Than Estimated
By Edmund Lee and Danielle Kucera
Feb 14, 2012 5:09 PM PT Inc. (AMZN)’s Prime service, a linchpin of its effort to keep customers loyal and fuel long- term profit, has attracted fewer than half as many members as analysts estimate, three people familiar with the matter said.

As of October, 3 million to 5 million people subscribed to Prime, a program begun in 2005 that provides two-day shipping for $79 a year, said the people, who asked not to be named because the figures are private. Amazon is working to reach 7 million to 10 million in the next 12 to 18 months, the people said. Analysts have pegged the current number at 10 million or more, with expectations for it to climb higher this year.

The slower adoption of Prime adds to concerns about Amazon’s revenue growth. The Internet retailer posted sales of $17.4 billion last quarter, trailing the $18.3 billion predicted by analysts. While the Prime service increases Amazon’s shipping costs, it’s seen as a way to lock in customers and prod them to shop more, according to ChannelAdvisor Corp. Fewer Prime users would mean there are fewer of Amazon’s most dedicated customers.

“A Prime customer is much more likely to start and end a search and purchase on Amazon without bothering to check other channels,” said David Spitz, president of the Morrisville, North Carolina-based firm, which supplies e-commerce software to retailers. The subscribers spend three to four times more than regular customers, said Spitz, who had estimated that Prime had about 10 million to 12 million members.

Mary Osako, a spokeswoman at Seattle-based Amazon, declined to comment on the number of Prime members.

Kindle Promotion
Amazon, the world’s largest Internet retailer, has begun promoting Prime by offering free trial memberships to buyers of the Kindle Fire tablet computer. The October figures don’t include the impact of that promotion because the Fire didn’t go on sale until Nov. 14. Even so, JPMorgan Chase & Co. estimated that Prime had already reached 13 million by Sept. 30.

While Kindle Fire users get a free trial of the service, they must opt in if they want to continue using it. Amazon Chief Financial Officer Thomas Szkutak said on a conference call in January that it was too early to tell how many trial users were converting to subscriptions, though “early stats that we’re seeing we like a lot.”

Amazon shares fell less than 1 percent to $191.30 today. The stock has climbed 11 percent this year.

‘All You Can Eat’
The company began Prime seven years ago as a way for customers to get speedy unlimited shipping for a low annual fee. Chief Executive Officer Jeff Bezos called it an “all-you-can- eat” service that would make Amazon more convenient for shoppers while boosting costs in the short term. In February 2011, the company added a video-streaming service to the product, letting customers watch TV shows and movies over the Internet.

Amazon has struck deals with Viacom Inc. (VIAB) and News Corp. (NWSA) to add more video content, stepping up competition with Netflix Inc.’s Internet service. Netflix has more than 23 million streaming customers.

Analysts at Citigroup Inc., Needham & Co. and Robert W. Baird & Co. had all estimated that Prime reached at least 10 million members. Amazon doesn’t disclose figures for Kindle sales, Prime subscribers, or the amount of videos, books and other content Kindle users purchase over the device. That makes it difficult for analysts and investors to come up with accurate projections and make investment decisions, said Colin Gillis, an analyst at BGC Partners LP in New York.

Missing Data
“It drills home the point that you’re paying a premium valuation for this company and key pieces of their economics aren’t disclosed,” he said. Amazon trades at 139.6 times its trailing 12-month earnings, compared with 14.5 times for Apple Inc. (AAPL), according to data compiled by Bloomberg.

Even with less adoption than expected, the Prime promotion has weighed on Amazon’s shipping costs. Those expenses jumped 55 percent to $4 billion last year, dwarfing the $1.55 billion Amazon gets in shipping fees from customers.

Amazon has increased spending on distribution and fulfillment centers in recent years. That investment has put pressure on the company to earn a return on Prime customers, said Gillis, who recommends selling Amazon shares.

“Prime drives more use, but you don’t know how much more use it drives,” he said. “Amazon needs to rationalize its fulfillment.”

To contact the reporters on this story: Edmund Lee in New York at; Danielle Kucera in San Francisco at

To contact the editor responsible for this story: Tom Giles at

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To: ChrisGillette who wrote (160976)3/10/2012 5:02:28 PM
From: Sr K
   of 162589
Why would you post a column from after the close on 2/14, which is 3 weeks and 3 days (with a holiday) ago?

For some perspective, here is the trading summary for the 4 days starting with the day of that post:

Date Open High Low Close Volume Adj Close*

Feb 17, 2012 180.09 183.41 179.36 182.50 7,418,100 182.50
Feb 16, 2012 177.79 181.68 175.14 179.93 12,563,800 179.93
Feb 15, 2012 191.29 191.54 183.26 184.47 7,794,400 184.47
Feb 14, 2012 191.08 193.57 186.10 191.30 9,527,100 191.30

AMZN closed Friday at 184.32.

It seems the sentiment you want to play again played out already and that included the rumors of a 7.85" iPad. Usually the market has adjusted to or priced in what was known 3 weeks ago.

And expectations for AMZN were probably more affected by the introduction of the new iPad on March 7 than by the content of that column. AMZN is $3.23 higher since the 3/6 close.

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To: Sr K who wrote (160977)3/10/2012 8:21:57 PM
From: ChrisGillette
6 Recommendations   of 162589
<<Why would you post a column from after the close on 2/14. It seems the sentiment you want to play again played out already. And expectations for AMZN were probably more affected by the introduction of the new iPad on March 7 than by the content of that column>>

Dude, are you crazy? I barely post here and am not trying to 'play' or influence anything. I posted the article during non-market hours and highlighted that the data was from October 2011.

As a Prime subscriber, I was simply curious about the total number of subscribers to the service. I Googled my question, found a relevant article, and then posted it in case anyone else is interested.

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To: ChrisGillette who wrote (160978)3/11/2012 7:11:19 AM
From: ig
1 Recommendation   of 162589
I've been a Prime member for years. It's a big part of why I spend so much at Amazon. So I was very interested in the article you posted. Thanks.

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To: ig who wrote (160979)3/11/2012 10:20:19 AM
From: Sr K
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In the current Form 10-K, on page 25 Amazon reports

We expect our net cost of shipping to continue to increase to the extent our customers accept and use our shipping offers at an increasing rate; to the extent our product mix shifts to the electronics and other general merchandise category; to the extent we reduce shipping rates; to the extent we use more expensive shipping methods; and to the extent we offer additional services. We seek to mitigate costs of shipping over time in part through achieving higher sales volumes, negotiating better terms with our suppliers, and achieving better operating efficiencies. We believe that offering low prices to our customers is fundamental to our future success, and one way we offer lower prices is through shipping offers.

They reported net cost of shipping, 5.1% for the year, compared to 5.4% for its Q4 reported in an 8-K 1/31/2012.

There are 2 notes on that page 25, including one about Prime:

(1) Excludes amounts earned on shipping activities by third-party sellers where we do not provide the fulfillment service.
(2) Includes a portion of amounts earned from Amazon Prime memberships.

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From: TimF3/13/2012 5:56:04 PM
4 Recommendations   of 162589
Authors of Kindle Singles Are Raking in Tens of Thousands of Dollars

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