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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