Presentation Transcript

1. Financial Management Association

   Rochester Institute of Technology September 23, 2011 Kuldeep Shah MayankBindal
2. Disclaimer Financial Management Association September 23, 2011 Many of the phrases, tables and graphs used in this presentation have been cribbed from some or all of the following sources: 10‐K, 10‐ Q, Thomson, Hoovers, Mergent Online, Yahoo Finance, S&P online research documents. This presentation is intended to synthesize these sources so that they can be used to analyze a specific company.
3. Agenda Financial Management Association September 23, 2011 Company Overview Industry Analysis Ratio Analysis SWOT Analysis Valuation Recommendation
4. Company Overview Financial Management Association September 23, 2011 Opened “Earth’s Biggest Bookstore” in July95, with virtually unlimited shelf space Expanded into almost all every retail category Allows other individuals and businesses to sell products for fixed fees/sales commission Manufactures and sells e-book reader Amazon Kindle Provides technology infrastructure through Amazon web services 55% of sale from North America, 45% International (2010) 44% media products, 53% electronics & general merchandise, and other 3%
5. Kindle Financial Management Association September 23, 2011 Expected Launch – Thanksgiving Price comparable to iPad $499 to $829 Double as tablet
6. AMZN Kindle SWOT AnalysisStrengths Financial Management Association September 23, 2011 Full-fledged tablet running Android OS Multi touch with color display UI custom designed by Amazon Price same as NOOK by Barnes & Noble and $200 less than RIM PlayBook Books delivered in under 60 seconds Long battery life Larger selection Kid friendly
7. AMZN Kindle SWOT AnalysisWeaknesses Financial Management Association September 23, 2011 No Google apps No access to Google's Android Market Multi-touch restricted to two fingers only No camera Only 6GB storage Wi-Fi only Cannot share content
8. AMZN Kindle SWOT AnalysisOpportunities Financial Management Association September 23, 2011 Amazon's Cloud drive, Instant video streaming & MP3 store already in place Preferred by age group - 50 years +, yet, big hit with universities and schools This age group accounts for almost 33% of the US population LINUX Open Source OS for developers Text-to-speech: Read textbooks to you Audio books big business Amazon already offers DRM-free music Established relationships with record companies, movie studios, publishers etc. = great content available on the new Kindle
9. AMZN Kindle SWOT AnalysisThreats Financial Management Association September 23, 2011 Source code released Featured apps not given enough time to rake in the cash Price - can buy Netbook in the same amount (more features)
10. Amazon Web Services Financial Management Association September 23, 2011
11. Amazon Web Services LLC (AWS) Financial Management Association September 23, 2011 Amazon Web Services (AWS) is the focus of the company’s cloud computing efforts, providing computing power, data storage, applications and more in Amazon’s data centers that users access via the Internet, or cloud Analysts say AWS will soon bring in $1 billion in annual sales for Amazon, roughly matching the sales of Amazon’s popular e-reader, Kindle AWS earned Federal Information Security Management Act (FISMA) Moderate Authorization and Accreditation, expanding the AWS Security and Compliance framework AWS solution provider and reseller URS-Apptis was awarded an Infrastructure-as-a-Service blanket purchase agreement (BPA) from the U.S. General Services Administration (GSA) Government agencies can now easily procure on-demand, highly reliable, highly scalable, and cost-efficient technology resources using the GSA IaaSBPA
12. Biz Dynamics Financial Management Association September 23, 2011 Capital intensive – technology, IP and supply chain - $1Bn CAPEX in 2010 Huge breadth and depth of product lines Customer trust and first mover advantage (user feedback system) Amazon Ranked 2nd most valuable U.S. General retailers in 2011 by Financial Times Low switching costs for customers when shopping online
13. Industry Analysis Financial Management Association September 23, 2011 Only about 8% of total U.S. retail sales were estimated to be e-commerce transactions – 2010 Anticipated e-commerce share to be 11% by 2015 - $279 Bn Internet penetration in US 76% Vs Global 27%
14. Porter’s Five Forces Industry Rivalry -Enough leg room Vendor base Supply chain New Entrants Capital intensive Oligopolistic market Vendor relationships Low Competitive pressure Suppliers Low bargaining power High dependency Threat of Substitutes - Kindle 2nd mover Other cloud computing players E-bay and others Customers High bargaining power Low switching costs Financial Management Association September 23, 2011
15. AMZN Vs S&P500 Vs EBAY Financial Management Association September 23, 2011
16. Key Financials Financial Management Association September 23, 2011
17. Net Sales Financial Management Association September 23, 2011
18. Earnings Quality Source: Jefferson Research Financial Management Association September 23, 2011
19. Cash Flow Quality Source: Jefferson Research Financial Management Association September 23, 2011
20. Operating Efficiency Financial Management Association September 23, 2011
21. Operating Efficiency Financial Management Association September 23, 2011
22. Balance Sheet Quality Financial Management Association September 23, 2011
23. Valuation Ratios Financial Management Association September 23, 2011
24. Valuation Ratios Financial Management Association September 23, 2011
25. Recommendation - BUY Financial Management Association September 23, 2011 We recommend to BUY 9 shares of Amazon.com Inc. on Sep 23, 2011 based on the information we have gathered and our resulting research, we feel that AMAZON.COM INC has the probability to OUTPERFORM average market performance for the next year. The company exhibits ATTRACTIVE company size, risk and 5-year annualize return.