Financial Analysis of Amazon.com

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Financial Analysis of Amazon.com

Q1 - 9. Brief Description of the Company:

Founder and CEO Jeff Bezos opened the virtual doors of Amazon.com's online store in July 1995. The company was incorporated in 1994 in the state of Washington and reincorporated in 1996 in Delaware. The Company's principal corporate offices are located in Seattle, Washington. Amazon.com completed its initial public offering in May 1997, and its common stock is listed on the NASDAQ National Market under the ticker symbol AMZN. Amazon.com's fiscal year is based on the calendar year, and the last day of the fiscal year is December 31. The closing stock selling price for February 1, 2006 was $43.98. Amazon has never declared or paid cash dividends on its common stock.

Amazon.com Inc. operates web sites that sell various products and services, which primarily include apparel, shoes, and accessories; health and personal care; baby care products; books; camera and photography; and consumer electronics. The company and other sellers also offer various new, refurbished, and used items in categories, such as health and personal care, jewelry and watches, gourmet food, sports and outdoors, apparel and accessories, books, music, digital versatile discs, electronics and office, toys and baby, and home and garden. These products are purchased from distributors, publishers, and manufacturers. The company and its affiliates operate seven retail Web sites: www.amazon.com, www.amazon.co.uk, www.amazon.de, www.amazon.co.jp, www.amazon.fr, www.amazon.ca, and www.joyo.com. It also operates www.a9.com and www.alexa.com that enable search and navigation, and www.imdb.com, a movie database Web site.

As mentioned before, Jeffery P. Bezons is the President and Chief Exe...

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...g losses for several years and has not paid any dividends to its stockholders to this date. Moreover, the stock price data for the first quarter of 2006 shows that Amazon lost more than $10 in its stock price (net blow to stock holders receiving no dividends) during the quarter.(See the chart below). Further, the gloomy picture of net cash flows into the company almost put it on the verge of bankruptcy.

The inter-company industry data also discourages investors from putting their money into Amazon.com. The company ranks 15th (out of 119 industry total) in terms of Price to Equity Ratio, 29th in terms of EPS Growth and Long term (5yr) Growth Rate, and 39th in terms of Revenue Growth. (Source: www.finance.yahoo.com). The industry ranking for Amazon.com drives potential investors to other fruitful companies within the same industry.

Figure 1: Trend in stock price

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