11
Amazon.com
Amazon.com has outgrown the perception, created during the dot-com crash, that it could never make money, but it still challenges the faith of its investors. For the past two years, the online retailer has invested heavily in new technology, wiping out some of the profit gains it displayed since first moving into the black in 2003. In 2006, CEO Jeffrey Bezos plunged Amazon into digital media with an online movie service called Amazon Unbox. Bidding to become a 21st century digital utility, it is also moving into new markets that have nothing to do with retailing, such as paid services that allow other companies to tap into Amazon’s vast data storage and computing resources. But those investments have yet to pay off. As a result, the online retailer’s profits fell by half last year despite surprisingly strong sales of $10.7 billion, up 26% over the year before. Investors will have to be patient a while longer.
| Overall Grade | A |
|
| Market Data | AMZN | |
| Market Value (2/28/2007) |
$16.2 Billion |
|
| Profitability* | 31.6% | A- |
| Sales Growth Rate** | 26.3% | A |
| 12-Month Sales | $10.7 Billion |
|
| 12-Month Net Income | $0.2 Billion |
|
| Total Return | Past 12 Months4.5% | Past 36 Months-9.0% |
| Economic Sector | Consumer Discretionary | |
| Industry | Internet Retail | |
The overall sector letter grade reflects how the weighted average of the return on income, or return on equity, and sales growth grades compare with others in the same sector. For the overall grade as well as the ROE/ROI and sales growth grades, an "A" places a company in the top 7% of its sector and an "A-" in the top 14% of the sector. The actual ranking was done using the underlying numerical measures. Grades are for information only.
* For nonfinancial companies, three-year average pretax operating profit before interest and special items as a percentage of average invested capital. For financial companies, pretax profits as a percentage of average shareholder's equity.
*Three-year average annual sales growth based on the most recently reported 36 months, calculated using the least-squares method.
