Skip to comments.Amazon: Another Dell In the Making?
Posted on 02/06/2013 10:14:26 AM PST by ExxonPatrolUs
Is Amazon.com (Nasdaq: AMZN) the next Apple (Nasdaq: AAPL) or another Dell (Nasdaq: DELL)?
Its an all-important question for investors.
Both computing stocks once sported sky-high price/earnings multiples, and both have seen them come way down. But of course thats where the similarities end.
While Apples valuation came down by virtue of soaring earnings, Dells took the more common route of a declining share price. Now Apple is the most valuable company on Earth, while Dell is just another leveraged buyout.
What made the expensive Apple of a decade ago so much the better bet than Dell?
Well, Steve Jobs for one. Also, revolutionary products. But none of those advantages would have much helped shareholders without another, underappreciated edge. In 2003, when its trailing price/earnings ratio stood well above 100, Apple had all of $6.2 billion in annual revenue and roughly 3% of the U.S. PC market. Meanwhile, Dell had the ostensibly cheaper stock with a trailing p/e of about 35, $35 billion in annual revenue and a market share above 30%, tops among domestic PC makers. In other words, it had a much shorter runway than Apple.
Now look at those numbers again and guess where Amazon fits in today. This is a company with $61 billion in annual revenue, accounting for more than 15% of U.S. online sales. Thats basically your vintage 2003 Dell. The one way in which Amazon is more like the 2003 Apple is in the lofty multiple its shares fetch, at some 180 times this years projected earnings. So this is already a jumbo jet attempting to take off from an aircraft carrier. The chances of this ending well for passengers are low.
(Excerpt) Read more at forbes.com ...
Pointless analysis, my head hurts after reading
I think the message is buy long term puts on Amazon.
Amazon owners put millions into supporting Homosexual Marriage.
Amazon chose to cave in to Governor Moonbeam and collect sales taxes on merchandise sold to California residents. For that reason, I no longer purchase anything from Amazon.