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Author: rubberthinking Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 14644  
Subject: Re: FKA: VL forward estimates Date: 8/21/2013 1:43 PM
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Amazon are still managing the company for sales growth and ignoring earnings.
If they manage for earnings, they will probably be able to make a reasonable profit.
Not reasonable compared to their market valuation, but in absolute terms quite a lot of money.
But their sales growth will stall if they do because it means raising prices, and their
shareholder base which has been trained to focus on nothing but the top line might bail, crushing the share price.
But the interesting thing will be how much their sales actually fall
off if/when they are no longer price leaders.
We may never know, if they never try to make a profit.

Jim,

This is the ultimate definition of economic insanity.

We have very few discussions of economic profits v. accounting profits here on the fool. Economic profits philosophically matter greatly. An industry's or company's economics allow it a long term viability with certain realities or parameters for how large and profitable it will be. Amazon is a case of no economic profits. I wonder if they are a total loss in fact because of their economic model.

We are seeing new materials in nano tech such as nano lines. They have huge strength to size ratio never seen before, this is like the internet business model in that we are seeing new properties in economics. It seems Amazon can go on and on with no profits. I would either call that a great strength or a great weakness. In fact I would call it both.

If it all comes crashing down I would in hindsight call it neither a strength nor a weakness, and I wont be surprised. My timing with Amazon's demise is not even that of broken watch which is right twice a day. I have always been wrong about Amazon. For now Amazon is a massive success, but if it fails it only will fail once.

Dave
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