Monday, February 19, 2007

Amazon

A Real Business Model Might Be Evolving

For those who have not looked at Amazon (AMZN) for a while, here are some interesting stats.

Revenue:
  • 2007 - $13.0B to $13.7B (estimated)
  • 2006 - $10.7B
  • 2005 - $8.5B
  • 2004 - $6.9B
  • 2003 - $5.3B
  • 2002 - $3.9B

Amazon is turning into a large company from a revenue perspective and its growth rate is very impressive. In addition, the company is profitable and generates a good amount of cash.

While revenue growth is quite impressive, its ability to forecast operating profits is interesting. Amazon is guiding for first quarter operating profit of $88 million to $122 million, for either a 22% decline or 16% growth versus last year.

For the year, Amazon is forecasting operating profit to decline 9% or to increase 30%. Management expects $355 million to $505 million in operating profit for 2007.

Amazon has a market cap of $16 billion. So it is selling for 1x sales, which is OK for a retailer. However, from the operating guidance, Amazon's business model is still a work in progress. With that said, if the company does get its model figured out, which it appears it will during the next couple of years, this stock could become a big winner.

Start following this stock again, the numbers are too good to ignore.

February 2, 2007




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