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Post by Deleted on Dec 28, 2013 18:53:50 GMT -8
WS has run AMZN way too high, if you run the math and the amount of runway required before it justifies its current valuation. Too, even Bezos acknowledges Amazon can be disrupted, and it could happen sooner than WS thinks (certainly well before Bezos is done running Ponzi's playbook).
Macalope is keying on one of my concerns:
"On the other hand, maybe Samsung knows the Gear is a flop and is poisoning the well for smartwatches by associating them with the worst kind of person."
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Post by mcharliem on Dec 28, 2013 19:09:51 GMT -8
That margin, Gregg. Not sales. If you trust the WS to value according to fundamentals, please explain AMZN for us. I think we are missing the point with Amazon. Profits invite competitors. No profits deter competition. Amazon is sacrificing profits to build the preeminent online retail ecosystem. No startup has the resources to duplicate Amazon's breadth of product offerings and services. Without profits they can't generate the cash flow required to do so. At some point in the future, Amazon is going to raise prices a few percentage points, and charge for (or stop offering) current free services. When that happens profits are going to flow like water through a breached dam. In the meantime Amazon grows customers (its most important objective at this time) and revenue. As long as Amazon continues as it has, with regard to customers and revenue, WS will value Amazon on what it will be worth when it makes that transition. I agree. Amazon might be the hardest company to value in the entire S&P 500. I don't know why people quote their 1500 P/E as something shocking, because their earnings could drop slightly and their P/E could end up being over a million. Who cares? If they dropped a penny more after that, they'd have no P/E at all. It's the same sort of shock headlines that people on here complain about with AAPL all the time. All that matters is they're purposefully running a break-even business with two goals in mind: 1) get as many loyal customers as possible. 2) have as few competitors as possible. If they wanted to, starting tomorrow, they could be a very profitable business. The only question is how many billions in annual profit would they be able to make? It could be 2 billion, it could be 10 billion, it's extremely hard to estimate. If people want to argue about Amazon being overvalued, explain how you would estimate their profits assuming they tried to make as much money as possible. Don't value the company on how much money they make now, when they're not even attempting to turn a profit. As far as I know, no company has ever attempted this strategy before with this large a business. So if nothing else, at least it's an original idea.
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Post by Deleted on Dec 28, 2013 19:20:19 GMT -8
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Post by zzmac on Dec 28, 2013 19:27:18 GMT -8
That margin, Gregg. Not sales. If you trust the WS to value according to fundamentals, please explain AMZN for us. I think we are missing the point with Amazon. Profits invite competitors. No profits deter competition. Amazon is sacrificing profits to build the preeminent online retail ecosystem. No startup has the resources to duplicate Amazon's breadth of product offerings and services. Without profits they can't generate the cash flow required to do so. At some point in the future, Amazon is going to raise prices a few percentage points, and charge for (or stop offering) current free services. When that happens profits are going to flow like water through a breached dam. In the meantime Amazon grows customers (its most important objective at this time) and revenue. As long as Amazon continues as it has, with regard to customers and revenue, WS will value Amazon on what it will be worth when it makes that transition. +1000 And the constant crying about Amazon's valuations is tiresome and of no (zero, nada) relevance to AAPL.
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Post by mcharliem on Dec 28, 2013 20:08:57 GMT -8
Imagine it's 10 years from now, Amazon has revenue 5 times what it does now, and it STILL hasn't "flipped-the-switch". How do you value that company? I would argue that as long as Bezos is in charge, they will never actually flip that switch, even if they were to become the largest company by revenue in the world. I think he believes owning the option of flipping this switch will always be more valuable than actually doing it.
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Mav
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Post by Mav on Dec 28, 2013 20:26:05 GMT -8
For the record, don't really care much about OR for AMZN's "valuation".
It'll be interesting to see if AMZN can cross the $150B revs barrier first, let alone $350B-ish, which _would_ be about 5x its present ttm revs. That's entering "rival to Wal-Mart" territory.
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Post by Deleted on Dec 28, 2013 20:31:13 GMT -8
And since when is $37B in net income for Apple's FY 2013 considered a "failure." Finally, Apple reported an increase in Sales for FY 2013, if that's important (seems to be for AMZN). I never described Apple's 2013 performance as a failure. I said . Dropping from $41B to $37B IS performing badly, especially when Revenue increased. Its a sign that the Firm's fundamentals have changed, and not for the better. In that scenario it is wise to lighten your position. With subsequent quarterly reports the scale of Apple's 'problem only got bigger (with WS continuing to lighten its AAPL position), culminating with an 11% reduction in annual Net Income. If you can't see that, then you can't see that. But not seeing does not mean it did not happen. Nobody sells a $700 equity down to $400 without reason. Nobody.
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Mav
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Post by Mav on Dec 28, 2013 20:39:16 GMT -8
Did you miss the part where I posted that Apple's cold-blooded business adjustment (which I'm mildly surprised there haven't been at least one or two shareholder suits publicized as a result of management's epic non-communication about shifting margin strategy) was the cause of it? Oh sure, pressure by competition and responding to said competition. Well, since 1980 (IPO date), right, so that's assumed all these years.
The effect of reduced net income is bad. WS no likey, or something. Yeah, we knew that already. But there's "bad years" and then there's looking beyond as to why the year was "bad". Stopping at $41B >> $37B doesn't tell the whole story. You might not think the explanation matters, but in the intermediate and long-term it pays to understand. Apple wasn't really off-course. It was a huge transition and course correction, but it was still playing the game on its own terms.
If you think AAPL deserved a multiple of under 10 at any point, that's fine. It won't be that way this year, and that's what matters to me now.
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Post by Deleted on Dec 28, 2013 20:44:32 GMT -8
Net Income is a Firm's life blood. Its what drives EPS (a favorite metric of many here). Tell that to WS. It takes 20 days for Apple to make in earnings what it has taken Amazon 19 years. Apple has competitors, Amazon does not. Apple's drop in Net Income could have been caused by competitors eating away at Apple's profits. Amazon faces no such threat. The selloff in AAPL was warranted until Apple can show that the drop was temporary. Unfortunately it took 6 quarters for Apple to demonstrate that (this quarter's results). I believe that WS also feels this way, as evidenced by a near $200 gain in AAPL in the last 5 months. Still WS is holding back until Apple's seeming recovery is confirmed (FQ2/2014 GUIDANCE).
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Post by Deleted on Dec 28, 2013 20:48:36 GMT -8
I think we are missing the point with Amazon. Profits invite competitors. No profits deter competition. Amazon is sacrificing profits to build the preeminent online retail ecosystem. No startup has the resources to duplicate Amazon's breadth of product offerings and services. Without profits they can't generate the cash flow required to do so. At some point in the future, Amazon is going to raise prices a few percentage points, and charge for (or stop offering) current free services. When that happens profits are going to flow like water through a breached dam. In the meantime Amazon grows customers (its most important objective at this time) and revenue. As long as Amazon continues as it has, with regard to customers and revenue, WS will value Amazon on what it will be worth when it makes that transition. I agree. Amazon might be the hardest company to value in the entire S&P 500. I don't know why people quote their 1500 P/E as something shocking, because their earnings could drop slightly and their P/E could end up being over a million. Who cares? If they dropped a penny more after that, they'd have no P/E at all. It's the same sort of shock headlines that people on here complain about with AAPL all the time. All that matters is they're purposefully running a break-even business with two goals in mind: 1) get as many loyal customers as possible. 2) have as few competitors as possible. If they wanted to, starting tomorrow, they could be a very profitable business. The only question is how many billions in annual profit would they be able to make? It could be 2 billion, it could be 10 billion, it's extremely hard to estimate. If people want to argue about Amazon being overvalued, explain how you would estimate their profits assuming they tried to make as much money as possible. Don't value the company on how much money they make now, when they're not even attempting to turn a profit. As far as I know, no company has ever attempted this strategy before with this large a business. So if nothing else, at least it's an original idea. THANK YOU CHARLIE. If you think about it, WS is valuing Amazon as it would a startup, on its POTENTIAL to make profits, not on the profits it is making today. Bezos is playing a very smart game.
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Post by Deleted on Dec 28, 2013 20:53:44 GMT -8
Imagine it's 10 years from now, Amazon has revenue 5 times what it does now, and it STILL hasn't "flipped-the-switch". How do you value that company? I would argue that as long as Bezos is in charge, they will never actually flip that switch, even if they were to become the largest company by revenue in the world. I think he believes owning the option of flipping this switch will always be more valuable than actually doing it. I think WS feels the same way. You don't here complaints about how Bezos is managing the Company.
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Post by Deleted on Dec 28, 2013 20:56:42 GMT -8
Gregg - welcome back. I thought we lost you but its nice to see you post multiple useless posts again - JK. Good to see u. I've thought long and hard about how to respond to this post. Here it is: Define useful.
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Post by sponge on Dec 28, 2013 20:58:54 GMT -8
Imagine it's 10 years from now, Amazon has revenue 5 times what it does now, and it STILL hasn't "flipped-the-switch". How do you value that company? I would argue that as long as Bezos is in charge, they will never actually flip that switch, even if they were to become the largest company by revenue in the world. I think he believes owning the option of flipping this switch will always be more valuable than actually doing it. I met with a developer who build 2 of those 1 million sq foot distribution centers for Amazon. I warned him about my long term concerns regarding their business model. He said that Amazon does not plan on making a profit for two decades. Stupid plan. Plenty of time for someone to simply contact every Amazon customer and vendor and offer them a better experience and price. Walmart and Target can do it.
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Post by Deleted on Dec 28, 2013 21:15:36 GMT -8
Imagine it's 10 years from now, Amazon has revenue 5 times what it does now, and it STILL hasn't "flipped-the-switch". How do you value that company? I would argue that as long as Bezos is in charge, they will never actually flip that switch, even if they were to become the largest company by revenue in the world. I think he believes owning the option of flipping this switch will always be more valuable than actually doing it. I met with a developer who build 2 of those 1 million sq foot distribution centers for Amazon. I warned him about my long term concerns regarding their business model. He said that Amazon does not plan on making a profit for two decades. Stupid plan. Plenty of time for someone to simply contact every Amazon customer and vendor and offer them a better experience and price. Walmart and Target can do it. Uh uh. Amazon has a 10 year head start in managing the logistics of an online retail operation. If Walmart or Target could do it, they would have. But thinking like traditional retailers, they don't see the point, when there's no profit to be had. In that environment, as the second or third entry, your competitive differentiation is price. That being the case who wants to compete with a firm that isn't posting any profit, whether its intentional or not?That's one of the reasons Apple's anti-trust conviction is so crazy. As the new comer in digital sales, Apple undertook breaking Amazon's monopoly by forcing Amazon to stop selling digital books below cost. In my opinion (I'm not a lawyer, but I slept at Holiday Inn Express a couple years ago), Amazon is violating its monopoly status by selling books of any stripe below cost, thereby denying entry to the market to new competitors. That is the simplest, most basic, definition of a Sherman Antitrust violation there is.
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Post by mace on Dec 28, 2013 21:41:45 GMT -8
I think we are missing the point with Amazon. Profits invite competitors. No profits deter competition. Amazon is sacrificing profits to build the preeminent online retail ecosystem. No startup has the resources to duplicate Amazon's breadth of product offerings and services. Without profits they can't generate the cash flow required to do so. At some point in the future, Amazon is going to raise prices a few percentage points, and charge for (or stop offering) current free services. When that happens profits are going to flow like water through a breached dam. In the meantime Amazon grows customers (its most important objective at this time) and revenue. As long as Amazon continues as it has, with regard to customers and revenue, WS will value Amazon on what it will be worth when it makes that transition. That sounds the Google/Android strategy. Some day profits will flow. The moment the public sees an increase in prices, they will leave Amazon in droves. There is nothing exciting about ordering on line. The internet has been doing that for a long time. Sponge, Gregg is right. You and Mercel just didn't get Amazon but AMZN investors gets it. So long earning is about zero, revenue grows, investors would firmly believe Jeff Bozos (did I spell it right?).
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Post by mace on Dec 28, 2013 21:48:29 GMT -8
I would argue that as long as Bezos is in charge, they will never actually flip that switch, even if they were to become the largest company by revenue in the world. I think he believes owning the option of flipping this switch will always be more valuable than actually doing it. The beauty lies in Jeff Bezos continues to grow wealthier despite Amazon merely break-even.
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Post by Deleted on Dec 28, 2013 22:03:19 GMT -8
Imagine it's 10 years from now, Amazon has revenue 5 times what it does now, and it STILL hasn't "flipped-the-switch". How do you value that company? I would argue that as long as Bezos is in charge, they will never actually flip that switch, even if they were to become the largest company by revenue in the world. I think he believes owning the option of flipping this switch will always be more valuable than actually doing it. I agree.
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Post by Deleted on Dec 28, 2013 22:04:30 GMT -8
Sponge, Gregg is right. You and Mercel just didn't get Amazon but AMZN investors gets it. So long earning is about zero, revenue grows, investors would firmly believe Jeff Bozos (did I spell it right?). LOL. You sure did.
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Post by Deleted on Dec 28, 2013 22:08:22 GMT -8
And the constant crying about Amazon's valuations is tiresome and of no (zero, nada) relevance to AAPL. This is the weekend thread, in case you don't use a calendar. If someone is making an argument that WS nails AAPL's valuation on fundamental analysis, then AMZN is highly relevant. Sorry, but 80 posts doesn't quite qualify you to be moderator.
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Post by sponge on Dec 28, 2013 23:38:30 GMT -8
And the constant crying about Amazon's valuations is tiresome and of no (zero, nada) relevance to AAPL. This is the weekend thread, in case you don't use a calendar. If someone is making an argument that WS nails AAPL's valuation on fundamental analysis, then AMZN is highly relevant. Sorry, but 80 posts doesn't quite qualify you to be moderator. LOL I agree. WS has little faith that Apple can grow earnings and revenue for 20 years but somehow an internet middle man who builds a bunch wear-houses and makes no profit demonstrates good business practice. Look Apple is building an International ecosystem. iTunes, iCloud, Siri, Maps, and millions of new customers every month that provide billions in profits today not tomorrow or in 20 years. They are investing billions in manufacturing and building huge databases around the world not just the US. One day they will turn on mobile payments, real search, and even Amazon like Internet shopping, and profits from those ventures will flow in the billions more. They can even lower their prices to capture marketshare. Amazon has to increase prices and decrease services to make a profit in the future. The two advantages they have today that simply makes them break even today. YES WS is all messed up.
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Post by rob_london on Dec 29, 2013 3:16:49 GMT -8
This is the weekend thread, in case you don't use a calendar. If someone is making an argument that WS nails AAPL's valuation on fundamental analysis, then AMZN is highly relevant. Sorry, but 80 posts doesn't quite qualify you to be moderator. LOL I agree. WS has little faith that Apple can grow earnings and revenue for 20 years but somehow an internet middle man who builds a bunch wear-houses and makes no profit demonstrates good business practice. Look Apple is building an International ecosystem. iTunes, iCloud, Siri, Maps, and millions of new customers every month that provide billions in profits today not tomorrow or in 20 years. They are investing billions in manufacturing and building huge databases around the world not just the US. One day they will turn on mobile payments, real search, and even Amazon like Internet shopping, and profits from those ventures will flow in the billions more. They can even lower their prices to capture marketshare. Amazon has to increase prices and decrease services to make a profit in the future. The two advantages they have today that simply makes them break even today. YES WS is all messed up. Irrational market behaviour... long may it continue!
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Post by Lstream on Dec 29, 2013 5:00:58 GMT -8
I think we are missing the point with Amazon. Profits invite competitors. No profits deter competition. Amazon is sacrificing profits to build the preeminent online retail ecosystem. No startup has the resources to duplicate Amazon's breadth of product offerings and services. Without profits they can't generate the cash flow required to do so. At some point in the future, Amazon is going to raise prices a few percentage points, and charge for (or stop offering) current free services. When that happens profits are going to flow like water through a breached dam. In the meantime Amazon grows customers (its most important objective at this time) and revenue. As long as Amazon continues as it has, with regard to customers and revenue, WS will value Amazon on what it will be worth when it makes that transition. +1000 And the constant crying about Amazon's valuations is tiresome and of no (zero, nada) relevance to AAPL. Agree with you. Not that it will change anything. AMZN is valued in a completely different way to Apple. Always has been. I think most here get it. There should be an AMZN sticky for those that wish to discuss that topic. Then there would at least be some choice involved and a way to avoid the never ending stream of complaining.
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Post by Deleted on Dec 29, 2013 5:28:56 GMT -8
Here's a sticky: Price is truth when it comes to the stock market. Lol.
The WHOLE point of this board is to share information about Apple in the stock market. The valuation of it on WS is relative to other stocks. Always has been, always will be. Like, duh.
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Post by Lstream on Dec 29, 2013 6:01:20 GMT -8
Here's a sticky: Price is truth when it comes to the stock market. Lol. The WHOLE point of this board is to share information about Apple in the stock market. The valuation of it on WS is relative to other stocks. Always has been, always will be. Like, duh. How does ... 1. Labelling analysts as lazy 2. Accusing Bezos of running a Ponzi scheme 3. Playing word games like Bozos ... Have anything to do with sharing information about Apple? BTW, I am firing my broker for suggesting that I buy AMZN. So I don't agree with the valuation either. But comparing AAPL to AMZN valuation and expecting to discover anything useful is way past the stale date. That should be obvious.
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Post by mcharliem on Dec 29, 2013 6:31:48 GMT -8
I would argue that as long as Bezos is in charge, they will never actually flip that switch, even if they were to become the largest company by revenue in the world. I think he believes owning the option of flipping this switch will always be more valuable than actually doing it. The beauty lies in Jeff Bezos continues to grow wealthier despite Amazon merely break-even. I don't think Bezos cares very much about his personal wealth. AMZN's share price could collapse and I don't think it would make him change his mind on running a break-even business. I think the only way Amazon turns into a for profit business is from someone else being in charge, either from a natural succession or from Bezos being fired. I don't think either of those scenarios are very likely in the next 10 years.
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Post by rickag on Dec 29, 2013 7:05:30 GMT -8
…Amazon is sacrificing profits to build the preeminent online retail ecosystem"… My version of this statement would be,"Amazon is sacrificing profits as company policy defined by preditory pricing.
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Post by nagrani on Dec 29, 2013 8:23:56 GMT -8
If apple comes up with either a smart watch and/or tv in 2014 - do you think they will announce a preview of the device in January like they did with first iPhone (jan 9th, 2007) or iPad (jan 27th, 2010)?
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Post by sponge on Dec 29, 2013 8:39:31 GMT -8
I don't care much about AMZN valuation. WS does judge different industries in different ways.
I think Apple can hurt Amazon's business model in the next 20 years.
Siri and their patented 3D shopping experience can simply scan the www and give me the best service and price. It may even chose Amazon as a retailer, but only if I am truly looking for the cheapest. So apple helps the retailer with real profits and gives Amazon the loss leaders.
Most think they are getting a good deal, but there is no real search engine analyzing the true cost. Amazons advantage is price and selection. They have managed to put together many businesses that can sell their good and services in their virtual store. That model can be duplicated and improved.
The other issue is lifestyle. In the late 1800s Sears Catalog allowed folks who could not go to a store to order what they wanted. Catalogs have been around since then and have not driven malls out of existence. People still like to leave the house. I can order anything I want from Best Buy, Target, Walmart, JCrew, Ralph Lauren, Nordstrum and so on. But I still have the need to get out of the house. Unless Amazon makes their warehouses into true retail stores, they are simply a distributor not a real retailer.
Everyone is excited about the growth of online sales. That will peak some day, and only those who make a profit online will survive.
Apple only succeeded when people were able to visit their retail stores and play with their hardware. There is real value in having a physical presence for your products.
What happens if I have an App that even if it shows how I can save $10 on some item I am about to buy at Target, quickly calculates how much more I am saving by adding up all the other items in my shopping cart or items I have yet to buy on my list or buying pattern. Amazon's biggest advantages were shipping and sales tax. Those are going away. Now they have the biggest selection and lowest (apparent prices), fast delivery. I think those advantages are simply giving them customers and not profits. Overtime those too will be attacked by software. They are in trouble the same way Google and FB are long term. Someone will design and better internet experience.
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Post by sponge on Dec 29, 2013 8:47:19 GMT -8
If apple comes up with either a smart watch and/or tv in 2014 - do you think they will announce a preview of the device in January like they did with first iPhone (jan 9th, 2007) or iPad (jan 27th, 2010)? For the TV yes but not the watch. If the iWatch comes out it will be closer to the end of the year and after new iPads and iPhones. I don't see the iTV until 2015, but most likely 2016. A new Apple TV that can play games could come out anytime this year. So the two new categories would be gaming and wearables for this year. I think the iWatch will be huge.
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Post by nagrani on Dec 29, 2013 8:52:07 GMT -8
Say what?
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