How much cash has Amazon Books got?

[W. Kiernan]

Doug Henwood wrote:
> 
> W. Kiernan wrote:
> 
> > You experts, please excuse this dumbass question.  If I remember
> > right, I read somewhere that the stock in Amazon Books is worth
> > $20-billion and the stock value of Barnes and Noble is about
> > $2-billion, and that includes all those buildings and parking lots
> > and inventory and expresso machines, not to mention the B&N web
> > site, not to mention the wholesaler Ingram.
> >
> > First, have I got that right or is that something I remember from a
> > dream or something? Second, if Amazon's stock is worth $20-billion,
> > how much ready cash does Amazon Books have as a result of this?  Is
> > it possible they have got enough cash to buy Barnes and Noble
> > outright?  Or is all that enormous stock valuation like sea foam,
> > here it exists only between and amongst the traders in shares?
> 
> Amazon is capitalized at around $22 billion, B&N at $2.4b.
> 
> A company like Amazon.com, which loses pots on every sale, can be
> safely assumed to have little cash on hand, except for the few minutes
> after they get a fresh infusion from an optimistic investor. Their
> currency is stock, not cash - that's how they do acquisitions. I doubt
> they could do an all-stock acquisition of B&N, but who knows?

Then what do they use to pay their bills from Ingram and Fed Ex with?  I
mean, they couldn't sending out shares of Amazon.com stock to cover
their suppliers's invoices?  Or are they growing so fast that, even
selling at a loss, this month's cash influx is bigger enough continue to
pay last month's bills?


> > Amazon isn't the only one, this is actually a general question; why,
> > say, doesn't, Yahoo buy Gateway 2000?
> 
> Why should they? Hardware is like so second wave. Gateway - market cap
> $11 billion - has real earnings, and a P/E of 33, Yahoo of 1564.77
> (according to Yahoo's own quote page). Mixing Gateway shares with
> Yahoo's would only dilute their value!

Because if ("if"!) this bubble pops, buildings, parking lots, expresso
machines and PC factories will still probably retain at least a fair
part of their value.  If you had got into Amazon or Yahoo real early, or
you were a senior partner there with stock options, and you had ridden
it up thousands of percent, wouldn't you squirrel away a sizable piece
of your unlikely gains in companies with lots more reasonable P/Es?  Are
these Internet high-flyers utterly fearless?  Damn, if I owned two
percent of Amazon, I'd sure be tempted to trade one percent of Amazon
for ten percent of a solid thing like B&N, even at the risk that my
paper profits might be somewhat lower over the next three months.  I
guess I'm thinking more like a individual with his own personal fortune
tied up in shares of stock than a manager of some organization's
portfolio.

Suppose you arbitrarily define a "bubble stock" as one with a P/E
greater than 100, or one whose capitalized value has increased by 500%
or more in the last five years.  (You might choose different figures
than 100 and 500.)  Is the dollar volume of "bubble stocks" like Amazon
and Yahoo large enough that, say, a ten or twenty percent overflow of
their value (by nervous investors at least in part bailing out) could
significantly inflate the prices of traditional blue chips?  I know the
DJA is at record levels and it seems like a P/E of 33 is pretty high but
it isn't absurdly high.

Thanks a lot for the information.

Yours WDK - WKiernan at concentric.net