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Amazon stock dips after anaemic third quarter, tepid reception for Fire Phone - Page 3

post #81 of 122
Quote:
Originally Posted by allenbf View Post

I really don't understand the gloating of Amazon taking a hit?  Is it because they're a "competitor" of Apple?  (I don't even see them as a competitor, personally).

I enjoy the hell out of my Amazon Prime membership.  I am not interested in owning any of their hardware, but Amazon is a great retailer & they'll be around a long time to come.  

I don't think the gloating is from people looking at the company as consumers. I imagine nearly everyone here, myself included, is a happy Amazon customer. As an investor, you look at what Wall Street has allowed Amazon to get away with and it is puzzling. They have teetered on the edge of profitability for nearly 20 years, their outlook has never been all that encouraging, but the company has maintained a very high valuation. I don't think what you are seeing is gloating. It is more people collectively thinking it is about time. Amazon is very customer focused and I think that is great. I am not sure they have a particularly good business strategy and that is scary.
post #82 of 122
Quote:
Originally Posted by dasanman69 View Post

Not when you want to invest in developing new products and services.

You got suckered into the idea of profitless growth. Google has grown it's business and invested in the future WHILE posting profits. Apple has. Walmart did/has. Microsoft has.

Only fools don't understand that Amazon's money is going toward servicing EXISTING business and only a small amount is going toward FUTURE businesses. If they simply stopped "investing" and tried to post a profit, their entire business would collapse and they would be unable to continue operations. Think Enron.
Edited by Steven N. - 7/26/14 at 7:19am
post #83 of 122
Quote:
Originally Posted by RadarTheKat View Post

Where to even begin on this one?

Okay, first, what Buffett has to say regarding such companies:

The worst sort of business is one that grows rapidly, requires significant capital to engender the growth, and then earns little or no money.
- Warren Buffett

And then there's my own thoughts:

If you want to make tablets, video streaming hockey pucks and smartphones, essentially shadowing Apple's lines of business, you should expect to be assigned Apple's P/E.

and

Could it be that $800 million in expected Q3 losses is Bezos' early admission that the Fire phone is a flop? An $800 million write-down next quarter should just about cover it.
Not sure how the phone could be considered a flop yet. It just went on sale yesterday.
post #84 of 122

Online retailer thinks they can do a genius UI mated to first-rate hardware, connected to a rich ecosystem, virtually overnight (using some forked version of Android.) You know, what Apple has spent most of the past 8 years nailing down to a fine art, and the rest of its existence schooling the rest of the industry on how it's done. 

 

Unfortunately for the industry outside of Cupertino, the sea-change that occurred in June 2007 doesn't leave much room for others to make a similar impact unless they change the game entirely. The only hope that these me-too products have is to capture the low-end of the market. And any number of awful versions of Android running on awful hardware have addressed that segment. And whatever is left of it is probably looking for an iPhone 5C (and no, not a completely redundant Windows Phone.)

post #85 of 122
Quote:
Originally Posted by dasanman69 View Post

They are making money, they're just not hoarding it the way Apple does.

Apple doesn't hoard. It can't spend the money fast enough in a responsible way.
post #86 of 122
Quote:
Originally Posted by Tsun Zu View Post

I will keep buying from Amazon.

1. I got products at low cost,
2. I don't care if Amazon is making money or not.
3. I care even less for the stupids who invested in a company with P/E Ratio of 500. If you allow others to do the thinking on behalf of you, you always end up allowing them to rip you off. Sorry for the harsh words but this is reality.

What is "harsh" about saying that you bury your head in the sand so that the coming storm will not cause alarm?

An unsustainable business model will not keep those Wal-Mart-style bargains you cherish from continuing forever. Something's got to give.

"Apple should pull the plug on the iPhone."

John C. Dvorak, 2007
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"Apple should pull the plug on the iPhone."

John C. Dvorak, 2007
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post #87 of 122
Originally Posted by Tsun Zu View Post
I will keep buying from Amazon.

1. I got products at low cost,

2. I don't care if Amazon is making money or not.

 

I will continue to buy from Amazon in the same manner in which I already am, but will be much more likely to do so over alternatives if I know that Amazon is losing money on what I buy. Even though this feels like a mathematical impossibility, I’d be fine with paying more for a product at Amazon than an alternative if it means they will lose money.

 

That’s actually a pretty good business strategy. Amazon could put banners on the pages of products that lose them money to advertise them! They’ll get way more sales that way. What could POSSIBLY go wrong?!

Originally Posted by Marvin

The only thing more insecure than Android’s OS is its userbase.
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Originally Posted by Marvin

The only thing more insecure than Android’s OS is its userbase.
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post #88 of 122
Quote:
Originally Posted by Tallest Skil View Post

I will continue to buy from Amazon in the same manner in which I already am, but will be much more likely to do so over alternatives if I know that Amazon is losing money on what I buy. Even though this feels like a mathematical impossibility, I’d be fine with paying more for a product at Amazon than an alternative if it means they will lose money.

That’s actually a pretty good business strategy. Amazon could put banners on the pages of products that lose them money to advertise them! They’ll get way more sales that way. What could POSSIBLY go wrong?!

I do a lot of price comparisons when shopping, and Amazon's price is usually either the same, or just a tad bit less than a retail store. I bought a pair of Timberland boots recently at Sears because the price was actually a few dollars less than Amazon. Sure you'll find an insane deal here and there on Amazon but that's the exception not the rule.
"Few things are harder to put up with than the annoyance of a good example" Mark Twain
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"Few things are harder to put up with than the annoyance of a good example" Mark Twain
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post #89 of 122
Quote:
Originally Posted by Tsun Zu View Post

I will keep buying from Amazon.

1. I got products at low cost,
2. I don't care if Amazon is making money or not.
3. I care even less for the stupids who invested in a company with P/E Ratio of 500. If you allow others to do the thinking on behalf of you, you always end up allowing them to rip you off. Sorry for the harsh words but this is reality.

Your thinking is extremely short sighted and miopic.
Look what happenned with the .com bubble. Look what happenned with the real estate bubble. When Amazon crashes (when not if) there will be wide spread hurt all around. Almost every single Mutual fund has Amazon stock. When it crashes your 401k will be smaller. Tens of thousands of jobs will be lost. Yet Mr Bezo's will walk away with his billions while we all pay the bill with our 401k.

But go ahead and enjoy your cheap purchases. Every thing has a price. Eventually you will pay.
post #90 of 122
Quote:
Originally Posted by dasanman69 View Post

They are making money, they're just not hoarding it the way Apple does.

This is simply the dumbest thing I've read on the internet this week. Good job.

You say Amazon is using its earnings to grow? Lets look 5 years back. They put a ton of money into the Kindle reader. Five years latter has that really lead to profit grow. No. In fact the Kindle reader is now a nitche product. Do you really thing 3rd class devices like there tablets/phones will lead to growth? The Kindle Fire has been out for 3 years and it sales are plummeting. Another investment that did not pan out.

What about there investments in cloud services? In five years they will need to replace all there hardware. Thats not really an investment, just an added expense. And Cloud has become an extremely commoditized service. Players like Google are selling cloud space at ridiculoudly low prices. So what are all these investments that will pay off? Warehouses? Shipping centers? Please.

Apple is not hoarding. With your reasoning everyone should spend every cent that they earn. If not they are hoarding. Apple is paying the most dividends annually to its shareholders in history. Apples buyback is by far the largest ever in corporate history by tens of billions. The last two years Apple has purchased dozenns of companies and spent Billions in acqusitions, strategic alliances, and investments in R&D and manufactering equipment.


I can be the toughest critic of Apple. I own $120k in shares. They are doing an excellent job with there cash. Its not hoarding. Its called being smart and responsible.
Edited by sog35 - 7/26/14 at 12:50pm
post #91 of 122
Quote:
Originally Posted by sog35 View Post

This is simply the dumbest thing I've read on the internet this week. Good job.

You say Amazon is using its earnings to grow? Lets look 5 years back. They put a ton of money into the Kindle reader. Five years latter has that really lead to profit grow. No. In fact the Kindle reader is now a nitche product. Do you really thing 3rd class devices like there tablets/phones will lead to growth? The Kindle Fire has been out for 3 years and it sales are plummeting. Another investment that did not pan out.

What about there investments in cloud services? In five years they will need to replace all there hardware. Thats not really an investment, just an added expense. And Cloud has become an extremely commoditized service. Players like Google are selling cloud space at ridiculoudly low prices. So what are all these investments that will pay off? Warehouses? Shipping centers? Please.

Apple is not hoarding. With your reasoning everyone should spend every cent that they earn. If not they are hoarding. Apple is paying the most dividends annually to its shareholders in history. Apples buyback is by far the largest ever in corporate history by tens of billions. The last two years Apple has purchased dozenns of companies and spent Billions in acqusitions, strategic alliances, and investments in R&D and manufactering equipment.


I can be the toughest critic of Apple. I own $120k in shares. They are doing an excellent job with there cash. Its not hoarding. Its called being smart and responsible.

Newsflash: most people are in debt for much more than they make and/or have saved, so yes they're spending every dollar they earn. You're smart enough to know that.
"Few things are harder to put up with than the annoyance of a good example" Mark Twain
"Just because something is deemed the law doesn't make it just" - SolipsismX
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"Few things are harder to put up with than the annoyance of a good example" Mark Twain
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post #92 of 122
Quote:
Originally Posted by dasanman69 View Post

Newsflash: most people are in debt for much more than they make and/or have saved, so yes they're spending every dollar they earn. You're smart enough to know that.

Newsflash: those people don't know how to manage their finances.
post #93 of 122
Quote:
Originally Posted by iaeen View Post

Newsflash: those people don't know how to manage their finances.

Beginning with the government.
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"Few things are harder to put up with than the annoyance of a good example" Mark Twain
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post #94 of 122
Quote:
Originally Posted by dasanman69 View Post

Beginning with the government.

Well, I can't say I disagree with you there.
post #95 of 122
Quote:
Originally Posted by dasanman69 View Post


Newsflash: most people are in debt for much more than they make and/or have saved, so yes they're spending every dollar they earn. You're smart enough to know that.

 

Newsflash: So why should Apple be looked as hording their cash when what they are doing is smart and responsible?  Why Amazon is spending almost every single cent they earn and they will need to get billions in loans very soon look as a good thing?

post #96 of 122
Quote:
Originally Posted by sog35 View Post

Newsflash: So why should Apple be looked as hording their cash when what they are doing is smart and responsible?  Why Amazon is spending almost every single cent they earn and they will need to get billions in loans very soon look as a good thing?

I never claimed either or, BTW there's nothing wrong with hoarding (amassing, or whatever you want to call it) over $100 billion dollars.
"Few things are harder to put up with than the annoyance of a good example" Mark Twain
"Just because something is deemed the law doesn't make it just" - SolipsismX
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"Few things are harder to put up with than the annoyance of a good example" Mark Twain
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post #97 of 122
Quote:
Originally Posted by dasanman69 View Post

Quote:
Originally Posted by sog35 View Post

Newsflash: So why should Apple be looked as hording their cash when what they are doing is smart and responsible?  Why Amazon is spending almost every single cent they earn and they will need to get billions in loans very soon look as a good thing?

I never claimed either or, BTW there's nothing wrong with hoarding (amassing, or whatever you want to call it) over $100 billion dollars.

Money can't buy happiness. I have $50MM and I'm no more happy than when I only had $48MM.

On a different note. How is it that Amazon dares to not raise prices? Apple sells for the same price or higher than Amazon and is making money hand over fist...?
"That (the) world is moving so quickly that iOS is already amongst the older mobile operating systems in active development today." — The Verge
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"That (the) world is moving so quickly that iOS is already amongst the older mobile operating systems in active development today." — The Verge
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post #98 of 122
Quote:
Originally Posted by Macky the Macky View Post

Money can't buy happiness. I have $50MM and I'm no more happy than when I only had $48MM.

That's a lot of Macking lol.gif Btw how were you supposed to eat that many M&Ms?
"Few things are harder to put up with than the annoyance of a good example" Mark Twain
"Just because something is deemed the law doesn't make it just" - SolipsismX
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"Few things are harder to put up with than the annoyance of a good example" Mark Twain
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post #99 of 122

Lot of people at AI have hearts (and brains). I love this site, its writers & its patrons.

By 2012, er 2020 big changes will be coming. For the good.


Edited by mhikl - 7/27/14 at 10:33pm

When I find time to rewrite the laws of Physics, there'll Finally be some changes made round here!

I am not crazy! Three out of five court appointed psychiatrists said so.

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When I find time to rewrite the laws of Physics, there'll Finally be some changes made round here!

I am not crazy! Three out of five court appointed psychiatrists said so.

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post #100 of 122
Quote:
Originally Posted by mhikl View Post

Lot of people at AI have hearts (and brains). I love this site, its writers & its patrons.
By 2012, big changes will be coming. For the good.

Did you write that 3 years ago and only now hit the 'reply' button? lol.gif
"Few things are harder to put up with than the annoyance of a good example" Mark Twain
"Just because something is deemed the law doesn't make it just" - SolipsismX
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"Few things are harder to put up with than the annoyance of a good example" Mark Twain
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post #101 of 122
Quote:
Originally Posted by dasanman69 View Post


Superior technology doesn’t always win. Plasma was vastly superior to LCD and they're not longer being made. The dot coms went belly up because people simply stopped buying from them. Though Amazon lost money their business actually went up by a lot. One can survive a long time by threading water and keeping one's nose just above the water.

As far as a business is concerned, superior technology doesn't always win. The product that the business puts out has to bring something new to the table that is worth spending money on. It's up the company to convince customers that their product is worth spending money on compared to the existing products. My comment about superior technology was in regards to Amazon's record of disrupting industries. In my book, outlasting competitors by being able to eat losses longer than they can isn't really that impressive to me.

 

Dot coms went belly up because most of them either (a) had no real product but simply presented grandiose plans for one, (b) were working on a product that had limited upside potential, or (c) had a product but sold it below cost in order to follow the "market share first profits later" strategy. They didn't fail simply because people stopped buying from them. Dot coms presented their grandiose ideas to venture capitalists who didn't know how to value these companies. They wrote huge checks to dot com startups based on their pitches. These companies burned through their VC funding on their pie-in-the-sky concepts. After burning through VC cash, the companies went public and watched their valuations soar. They posted losses but continued to push the idea that they had to lose money in order to get big quickly. This went on until those companies had burned through all the cash raised through the IPO. After burning through the IPO money too, investors finally wisened up to the fact that the ideas were nothing more than just pipe dreams. In the face of mounting losses, many went belly up. 

 

The point is that the dot coms didn't fail simply because people stopped buying them. Those companies were bid up to unreasonable valuations on the basis of nothing more than blue sky. If a business isn't making money, it has to get the money from somewhere to cover its expenses. For many dot coms, the source of money came from venture capitalists. They raised some more cash after their IPOs to keep the party going a bit longer. After the money ran out, they went bust.

 

One can survive for a long time treading water, which is what Amazon is doing as far as profitability is concerned. That's true. Amazon can continue doing what they're doing because they have the money to keep on eating losses. But Amazon commands a large P/E multiple. The market expects Amazon to stop having to tread water eventually. There just doesn't seem to be an end in sight. 

Quote:

Originally Posted by dasanman69 View Post


They are making money, they're just not hoarding it the way Apple does.

You defend Amazon's poor profitability by saying that they're making money but they're choosing not to "hoard it" like Apple. Apple is not hoarding their money. Apple's pile of profits is like an overflowing toilet. If you think Apple should emulate Amazon, what would you have Apple do with its profits? 

 

post #102 of 122
Quote:
Originally Posted by sog35 View Post
 

 

Newsflash: So why should Apple be looked as hording their cash when what they are doing is smart and responsible?  Why Amazon is spending almost every single cent they earn and they will need to get billions in loans very soon look as a good thing?

 

Imagine the world were 100x its current size and people had decent wealth distribution.  Now 95% of the population would be dying to buy their first smartphone.  If that growth potential existed, I would tell Apple to take their 50 bill in profits and reinvest it in Apple.  Buy more factories equipment etc.  They would now report a loss.  Should their stock tank or go up?  Their PE would be through the roof...

 

If Amazon stopped reinvesting the 4 bil a year they do, that money would go right to their bottom line.  So they could bank a profit of 4,000,000,000 minus the 300 mil... or show a profit of 3.7 billion.  They could then throw that in a bank offshore or give it back to investors.  Amazon has faith in their market growth and is investing accordingly.  There isn't much growth in high end phones... so Apple is banking profits instead.  Both have merit in different markets.

 

Amazon's drop in profits is actually because they got out Amazoned... by Google.  Amazon's accidentally stumbled into becoming the largest cloud provider in the world.  Profits were juicy.  Juicy enough that even Apple wanted to become a bigger player.  Googles new pricing put a dagger in one of Amazon's bigger money makers.  Amazon got undersold and is going to have to struggle to deal with it.

post #103 of 122
I think a reversion to Amazon's historical p/e of 60-100 should be expected. That would put the share price between $50-$100.

Look, companies built on low margins can't raise those margins (profits) without destroying their customer base. Just ask Ron Johnson (Apple, JCPenney).
post #104 of 122
Quote:
Originally Posted by Frood View Post

 

If Amazon stopped reinvesting the 4 bil a year they do, that money would go right to their bottom line.  So they could bank a profit of 4,000,000,000 minus the 300 mil... or show a profit of 3.7 billion.  They could then throw that in a bank offshore or give it back to investors.  Amazon has faith in their market growth and is investing accordingly.  There isn't much growth in high end phones... so Apple is banking profits instead.  Both have merit in different markets.

 

This is such a lopsided and naive view of why Amazon is not making money. So far gone there is no point in trying to reel you back in. Cut bait as they say in fishing. lol

 

Your view of Apple also is in the same category... limited and naive. 

post #105 of 122
Originally Posted by 1brayden View Post
This is such a lopsided and naive view of why Amazon is not making money. So far gone there is no point in trying to reel you back in. Cut bait as they say in fishing. Your view of Apple also is in the same category... limited and naive. 


Great argument¡ “You’re wrong, but I won’t bother explaining why.” I’m sure he believes you¡

Originally Posted by Marvin

The only thing more insecure than Android’s OS is its userbase.
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Originally Posted by Marvin

The only thing more insecure than Android’s OS is its userbase.
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post #106 of 122
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Originally Posted by Tallest Skil View Post
 


Great argument¡ “You’re wrong, but I won’t bother explaining why.” I’m sure he believes you¡


Don't need to convert everyone. Save that for the religions. I can't explain how the stock markets work to my grandkids until they learn basic math skills either.

post #107 of 122
Originally Posted by 1brayden View Post
Don't need to convert everyone. Save that for the religions. I can't explain how the stock markets work to my grandkids until they learn basic math skills either.


You’re not really making your case for not making your case.

Originally Posted by Marvin

The only thing more insecure than Android’s OS is its userbase.
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Originally Posted by Marvin

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post #108 of 122
Quote:
Originally Posted by Tallest Skil View Post
 


You’re not really making your case for not making your case.


I think I am. I don't post much. Often, I agree with your views. However, you sometimes post just to be argumentative. 

 

My point is, why argue or try to convince someone that is so deluded or have demonstrated they lack the foundational knowledge to have a discussion.

post #109 of 122
Originally Posted by 1brayden View Post
However, you sometimes post just to be argumentative. 

 

I would say ‘happen’ or ‘situationally expected’ instead of ‘just’.

 
My point is, why argue or try to convince someone that is so deluded or have demonstrated they lack the foundational knowledge to have a discussion.

 

And that’s a valid point with which I generally agree. Thing is, he isn’t

Originally Posted by Marvin

The only thing more insecure than Android’s OS is its userbase.
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Originally Posted by Marvin

The only thing more insecure than Android’s OS is its userbase.
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post #110 of 122
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Originally Posted by Tallest Skil View Post

 

And that’s a valid point with which I generally agree. Thing is, he isn’t

 

In this case he is out to lunch. The 3.7B he suggests Amazon could allocate towards profit is laughable. Just look at the financials and it will indicate it covers basics not 'investments'. Most businesses call it overhead/expenses. How does cashflow magically become profit?

 

Other companies invest into the future but bank a profit at the same time. Amazon has had 18+ years. I call BS.

post #111 of 122
Quote:
Originally Posted by 1brayden View Post

Other companies invest into the future but bank a profit at the same time. Amazon has had 18+ years. I call BS.

Jeff Bezos has played it pretty smart because he's retained a significant shareholding himself. Currently he has 18% and is the largest Amazon shareholder giving him a personal net worth somewhere close to $27b - he is the 21st wealthiest individual in the world by this standard. This makes it difficult for other shareholders to gain leverage to have him replaced in order to profit. When he feels like investing in one of his own interests outside of Amazon, he just sells shares:

http://www.forbes.com/sites/briansolomon/2013/11/06/jeff-bezos-sells-1-million-amazon-shares-pocketing-over-250-million-after-washington-post-splurge/

That's a pretty neat position to be in because you have all these big funds (BlackRock is one of them btw with $3.2b) tied up in the company with billions and they can't do anything to you. They won't risk trying to lower the value of their own assets and building up the stock means Bezos can sell fewer shares to do whatever he wants. The investors will still have gained from the value increase in the stock but the only way they can profit is to sell it.

This is another example of where the debate over income distribution isn't entirely accurate. The stat that came out recently was that the top 85 wealthiest people in the world hold around the same wealth as the bottom 50%. Jeff Bezos is one of the 85 people but the billions he has don't exist. What he has are highly overvalued shares in Amazon. The problem is you can't limit considerations over income to actual cash values because as far as we know, he could sell all his shares for cash for the amount listed. We just can't be certain that he'd be able to sell all his shares at the current price unless he does it.

Maybe it's time for regulators to clamp down on the rampant speculation in Wall Street by capping the P/E. I'm not sure what would be a good number but I imagine it would be lower than 851. This would mean a company couldn't sell shares that many times higher than their earnings. There could be exclusions for IPOs if they need to raise cash. It borders on fraud if the P/E is that high because the two values are supposed to be linked. Tesla's even worse at over 1300. There should at least be a separation between near-term earnings results and speculative future gains the way that investment banking is supposed to be separate from savings. When do earnings ever shoot up over 10x in 1 year? Then companies would be valued based on the more tangible earnings results rather than speculative values.
post #112 of 122
Quote:
Originally Posted by KiltedGreen View Post

Quote:
Originally Posted by allenbf View Post

Doesn't Walmart do the same thing?  It's just capitalism.

Yes, I expect Walmart do. That is exactly the problem with capitalism. We have globalised companies intertwined with governments in an unhealthy and tangled financial relationship. The evidence is there for all to see, especially in the USA, but here in the UK too, namely that all the people trying to earn a living by providing brick and mortar stores which give a place identity, character, history and a sense of community are being wiped out by rootless global corporations like Amazon and Walmart who sell the same products for loads less money that no small firm can compete with.

Why do you think that in my village, the baker, corner shop, garage and post office have all closed leaving us with just a pub? Why does the lovely town where I went to school now look hideous, desperate and almost identical to so many other towns - full of betting shops, pound shops, mini supermarkets and nail bars?

When your main motivation for choosing a supplier is low cost, this is the result. I've bought a few things off Amazon that are next to impossible to buy where I live such as small lithium batteries and other oddities but I try and buy everything locally whenever I can. Amazon and the supermarkets can all fold up and vanish tomorrow and it won't be a day too soon in my book.

Good post.
"If the young are not initiated into the village, they will burn it down just to feel its warmth."
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- African proverb
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post #113 of 122
Quote:
Originally Posted by dasanman69 View Post


Yet many of the purchases I make through Amazon are fulfilled by someone else. Amazon just handles the transaction (sound familiar?). In this case they're helping the competition not eliminating them.

 

Gnats that exist at the pleasure of Amazon.  A fig leaf that Amazon can point to and say "See? We're not a monopoly!"  If your competition consists of very small operations who are dependent on you for their existence, that's not really competition, is it?  Amazon can tighten the spigot on these 'competitors' any time somebody falls out of line.  You know, delaying shipment, downgrading product search placement, it's been known to happen.  Just ask Hachette.

post #114 of 122
Quote:
Originally Posted by Marvin View Post

Maybe it's time for regulators to clamp down on the rampant speculation in Wall Street by capping the P/E. I'm not sure what would be a good number but I imagine it would be lower than 851. This would mean a company couldn't sell shares that many times higher than their earnings. There could be exclusions for IPOs if they need to raise cash. It borders on fraud if the P/E is that high because the two values are supposed to be linked. Tesla's even worse at over 1300. There should at least be a separation between near-term earnings results and speculative future gains the way that investment banking is supposed to be separate from savings. When do earnings ever shoot up over 10x in 1 year? Then companies would be valued based on the more tangible earnings results rather than speculative values.

 

I'm not against regulation in principle but this is not a practical or even sensible proposal.  Banning high P/Es is like banning stupidity (in this case the stupidity of investors).  And anyone who bans stupidity is in essence, banning himself, or herself as the case may be.

post #115 of 122
Originally Posted by tundraboy View Post
I'm not against regulation in principle but this is not a practical or even sensible proposal.  Banning high P/Es is like banning stupidity (in this case the stupidity of investors).  And anyone who bans stupidity is in essence, banning himself, or herself as the case may be.

 

Agreed, but personally on the basis of considering this “banning the ability to fail”–of which we need more–and “continued expansion of government economic control”–against which I am.

 

Ooh, a Yodesque sentence that isn’t Yodified. Thanks, proper grammar!

Originally Posted by Marvin

The only thing more insecure than Android’s OS is its userbase.
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Originally Posted by Marvin

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post #116 of 122
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Originally Posted by NostraThomas View Post

I think a reversion to Amazon's historical p/e of 60-100 should be expected. That would put the share price between $50-$100.

Look, companies built on low margins can't raise those margins (profits) without destroying their customer base. Just ask Ron Johnson (Apple, JCPenney).

Or ask Walmart from their experience a few years back when they tried to move their clothing lines a notch up.  Just a notch, to Target levels, mind you.

 

It is very, very, very hard to move your brand upmarket.  You basically have to wait until the generation that knows you as a discount brand starts to die off and the generation that knows you only as a prestige brand to enter their prime earning years.  In short you have to wait for the market to forget you before you can reintroduce yourself as an upmarket brand.  That's a long time in the profit doghouse.

post #117 of 122

I said it before, Amazon will turn this around, once they have everyone locked into buying from them, you will see free shipping go away and deep discounted prices will be gone, their pricing will be no better than anyone else's and they will begin turning a profit.

post #118 of 122

This is a corporate strategy to invest heavily now to show a loss.  This will reduce the stock price and allow insiders to buy in more at low point.  When the investment starts to reap profit, the stock will skyrocket again.  Watch the insiders' move closely for the next 12 months.

post #119 of 122
Quote:
Originally Posted by tundraboy View Post

I'm not against regulation in principle but this is not a practical or even sensible proposal. Banning high P/Es is like banning stupidity (in this case the stupidity of investors). And anyone who bans stupidity is in essence, banning himself, or herself as the case may be.

I see it more like how they regulate commercial advertising. You could say that commercials should be able to make whatever claims they want and if people are stupid enough to believe it, it's their problem but that has caused harm to consumers in the past and so they regulate advertising.

If a company proclaims they have a magic rock and the magic rock will perform a miracle when the magic becomes active in 10 years, investors can see it being worth $30b. The potential for fraud is in their claim. They aren't promoting any old rock, the whole basis of the valuation is in the claims of magic. If 10 years goes by and there has been no evidence of delivering on their promise then they are defrauding investors.

It's not the company that's valuing the shares but they're the ones delivering the claims that drive investor perception of what they're worth. I think a P/E cap would go some way towards making the markets a bit less speculative. Hugely speculative valuations have the potential to cause more damage because there's no cash to backup the speculation.
post #120 of 122
Quote:
Originally Posted by Marvin View Post


I see it more like how they regulate commercial advertising. You could say that commercials should be able to make whatever claims they want and if people are stupid enough to believe it, it's their problem but that has caused harm to consumers in the past and so they regulate advertising.

If a company proclaims they have a magic rock and the magic rock will perform a miracle when the magic becomes active in 10 years, investors can see it being worth $30b. The potential for fraud is in their claim. They aren't promoting any old rock, the whole basis of the valuation is in the claims of magic. If 10 years goes by and there has been no evidence of delivering on their promise then they are defrauding investors.

It's not the company that's valuing the shares but they're the ones delivering the claims that drive investor perception of what they're worth. I think a P/E cap would go some way towards making the markets a bit less speculative. Hugely speculative valuations have the potential to cause more damage because there's no cash to backup the speculation.

There are already laws against companies misleading investors both by hiding material information or disseminating false information.  99% of the time though, ridiculously high stock prices is the investors' fault not the company's.

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