My High Dividend Stocks Blog http://myhighdividendstocks.posterous.com Most recent posts at My High Dividend Stocks Blog posterous.com Sun, 27 Nov 2011 11:18:45 -0800 Yet Another Reason Not to Buy Amazon.com (AMZN) Stock http://myhighdividendstocks.posterous.com/yet-another-reason-not-to-buy-amazoncom-amzn http://myhighdividendstocks.posterous.com/yet-another-reason-not-to-buy-amazoncom-amzn More proof that Amazon.com (AMZN) needs beta-testers more than it needs to pay a dividend.

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Amazon Foul-Ups: Google Access
Gary North
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Nov. 26, 2011

To give you an example of why Amazon needs more full-time beta-testers to search the site daily, consider this.

Someone searches Google for Amazon. He gets this:


   

He then wants to find out about Amazon Instant Video. He clicks the link. He gets this:


   
This can't be right. So, he clicks again. The same. And again. He gets this:


   
Enough said.

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Click here to read my other articles on why not to buy Amazon.com (AMZN) stock:

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http://files.posterous.com/user_profile_pics/697493/v_for_vendetta_guy_fawkes_mask11.jpg http://posterous.com/users/4wuf4tt8LZzb Jason Brizic myhighdividendstocks Jason Brizic
Sun, 27 Nov 2011 11:00:00 -0800 Another Reason Not to Buy Amazon.com (AMZN) Stock http://myhighdividendstocks.posterous.com/another-reason-not-to-buy-amazoncom-amzn-stoc http://myhighdividendstocks.posterous.com/another-reason-not-to-buy-amazoncom-amzn-stoc Here is another reason not to buy overpriced Amazon.com (AMZN) stock that is trading at over 120 times it five year average adjusted earnings per share.

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Amazon: "We Don't Make No Stinking Mistakes!"
Gary North

Nov. 26, 2011

I ordered an Amazon Kindle touch. I am planning to convert several dozen of my books into Kindle-readable format, so that I can sell them on-line. I want to see how the touch screen works.

I ordered the $99 version. But I changed my mind within five minutes. So, I canceled the order. Because I was given the option of explaining why, I told them it was because I was upgrading to a more expensive model: $149.

It was told on-screen that the order was canceled.

On Friday, November 25, I received two Kindles. They had no instruction manuals. They came with no packing slips/receipts. There was a card in each of them: getting to know your Kindle. The card is the size of a playing card. It tells how to charge the unit's battery. The card is model-unspecific.

I could not tell which was which. The only way that I finally found out was that I charged their batteries. At that point, one of them did reveal on its screen that it was the 3G unit. Otherwise, there was no way to tell.

To send it back, the return policy screen said to include the packing slip. There was no packing slip.


   
I am writing this article as a warning. Amazon's cancellation software doesn't always work. So, take care when you order something and then cancel within the allotted 30 minutes. You may not get 30 minutes.

The software should work. This is not just the cancellation software. For more evidence that Amazon needs full-time site beta-testers, click here: http://www.garynorth.com/public/8785.cfm

I joined Amazon Prime to save money on shipping. That's good. I applaud. But I received no welcome note telling me how I can view the free streaming movies or where the titles are listed. I have tried to find the list of free rental books. No success.

I am in the on-line order business. When a new member subscribes, my system sends him a detailed Welcome letter showing how things work and what the benefits are. Amazon should do the same. There should be a Welcome Prime Members page. There should be a link to this in the Welcome letter. It should be easily found by searching the site. If it's there, I could not find it. I was sold services that I cannot figure out how to access.

Then there are the various Kindle models. There should be a page of YouTube embedded videos on all aspects of using each of the various Kindle models. This is what generates business: users who use the service. Nothing digital is ever intuitive. This is obvious. Videos are the best way to teach new users. Amazon sells video storage space to users (S3). It lets sellers embed short videos on its sales pages. Yet the company is lackadaisical about using easily accessed how-to videos to make every aspect of its services clear to new users.

These are basic rules of business success. Amazon a big company. It needs beta-testers to keep reviewing all aspects of the site systematically all the time.

Entropy is forever. Things fall apart. It takes time and money to hold them together. There are parts of Amazon that are visibly falling apart.

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Link to original article: http://www.garynorth.com/public/8778.cfm

Click here to read my previous article on Amazon: http://www.myhighdividendstocks.com/no-dividend-stocks/retailers-day-three-amazon-com-amzn

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Wed, 23 Nov 2011 12:06:27 -0800 Retailers day three: Amazon.com (AMZN) http://myhighdividendstocks.posterous.com/retailers-day-three-amazoncom-amzn http://myhighdividendstocks.posterous.com/retailers-day-three-amazoncom-amzn

On Monday I looked at Wal-Mart (WMT) and on Tuesday I examined Target Corp. (TGT).  Today I will peer under the hood of Amazon.com (AMZN).  I can tell you now that I don’t like what I see.

Amazon.com (AMZN)

Share price: $190.07

Shares: 454.75 million

Market capitalization: $86.434 billion

Bonds: Amazon has no outstanding bonds.

DIVIDEND RECORD – That’s easy; there is none.  Amazon has never paid a dividend.

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EARNING POWER - $1.55 per share @ 454.75 million shares

(earnings adjusted for changes in capitalization – Amazon has slowly added a few million shares over the years)

                        EPS       Net inc.             Shares               Adj. EPS

2006                 $0.45    $190 M              424 M                $0.42

2007                 $1.12    $476 M              424 M                $1.05

2008                 $1.49    $645 M              432 M                $1.42

2009                 $2.04    $902 M              442 M                $1.98

2010                 $2.53    $1,152 M           456 M                $2.53

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2011Q1             $0.44    $201 M              454.75 M           $0.44

2011Q2             $0.41    $191 M              454.75 M           $0.41

2011Q3             $0.14    $93 M                454.75 M           $0.14

2011Q4 (est)      http://www.forbes.com/sites/josephhargett/2011/10/26/amazon-com-plunges-after-forecasting-potential-4q-loss/

Five year average adjusted earnings (2006-2010) was $1.48 per share.  This will be slightly lower with a 2011 reduction in EPS.

Consider contrarian buying below $11.84 (8 times avg. adjusted EPS)

Consider value buying below $17.76 (12 times avg. adjusted EPS)

Consider speculative selling above $29.60 (20 time avg. adjusted EPS)

Amazon.com is trading at 128 times average adjusted earnings.  This is insanely SPECULATIVELY priced.  A 4th quarter 2011 loss will devastate the stock price.

BALANCE SHEET – Shareholder equity has started to stagnate.  Amazon.com shares are speculatively overpriced for the equity they actually possess.  New Amazon investors are paying over 11 times the total equity per share.  The price to book value ratio should by down around 1 or 2 for something resembling value investing.

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Book value per share: $17.08

Price to book value: 11.26 (this is very bad)

Current ratio: 1.33 (Okay, over 2.0 is good)

Quick ratio: 0.70 (Okay, over 1.0 is good)

CONCLUSION – Amazon.com is speculatively priced at over 128 time average adjusted earnings.  The company pays no dividend and has never paid a dividend.  It has an average adjusted earning power of $1.48 per share.  I wouldn’t even consider this stock until it drops to below $17.76 which is 12 times average adjusted earnings.  The balance sheet is okay, but the stock is way overpriced.  This company might be a good stock to short in this declining market (especially if it loses money in the 4th quarter of 2011).  Wal-Mart and Target both provide superior rewards with less risk of principal going forward.  People that are going long on Amazon.com right now are insane.

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DISCLOSURE – I don’t own Amazon.com (AMZN) stock.

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