As part of its operating expenses in 2000, Amazon (AMZN) will report about 
$265 million in fulfillment costs, excluding customer service and credit card 
processing fees. Some experts think those charges should be included in the 
cost of goods sold, which would make its gross margins substantially 
smaller.

                           CURRENT             ALTERNATIVE
(in millions)              ACCOUNTING          ACCOUNTING

Net sales                  $2,795              $2,795
Cost of goods sold         $2,132              $2,397
Gross profit               $663                $398
Gross margins              24%                 14%
Total operating expenses   $986                $721
Loss from operations       $323                $323
Net loss                   $1,166              $1,166

DATA: LEHMAN BROS., BUSINESS WEEK