Upload
melvyn
View
30
Download
3
Tags:
Embed Size (px)
DESCRIPTION
Financial Management Association. Rochester Institute of Technology September 23, 2011. Kuldeep Shah Mayank Bindal. Disclaimer. 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‐ - PowerPoint PPT Presentation
Citation preview
Financial Management Association
Rochester Institute of TechnologySeptember 23, 2011
Kuldeep ShahMayank Bindal
2
Many of the phrases, tables and graphs usedin this presentation have been cribbed fromsome or all of the following sources: 10‐K, 10‐Q, Thomson, Hoovers, Mergent Online, YahooFinance, S&P online research documents. Thispresentation is intended to synthesize thesesources so that they can be used to analyze aspecific company.
Financial Management Association September 23, 2011
Disclaimer
Financial Management Association September 23, 2011 3
Company Overview Industry Analysis Ratio Analysis SWOT Analysis Valuation Recommendation
Agenda
Financial Management Association September 23, 2011 4
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%
Company Overview
Financial Management Association September 23, 2011 5
Expected Launch – Thanksgiving Price comparable to iPad $499 to $829 Double as tablet
Kindle
Financial Management Association September 23, 2011 6
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
AMZN Kindle SWOT AnalysisStrengths
Financial Management Association September 23, 2011 7
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
AMZN Kindle SWOT AnalysisWeaknesses
Financial Management Association September 23, 2011 8
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
AMZN Kindle SWOT AnalysisOpportunities
Financial Management Association September 23, 2011 9
Source code released Featured apps not given enough time to rake in the cash Price - can buy Netbook in the same amount (more features)
AMZN Kindle SWOT AnalysisThreats
Financial Management Association September 23, 2011 10
Amazon Web Services
Financial Management Association September 23, 2011 11
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 IaaS BPA
Amazon Web Services LLC (AWS)
Financial Management Association September 23, 2011 12
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
Biz Dynamics
Financial Management Association September 23, 2011 13
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%
Industry Analysis
Financial Management Association September 23, 2011 14
Porter’s Five Forces
Low Competitive pressure
Industry Rivalry-Enough leg room- Vendor base- Supply chain
Threat of Substitutes- Kindle 2nd mover- Other cloud
computing players
- E-bay and othersCustomers- High bargaining
power- Low switching
costs
Suppliers- Low bargaining
power- High dependency
New Entrants- Capital intensive- Oligopolistic
market- Vendor
relationships
Financial Management Association September 23, 2011 15
AMZN Vs S&P500 Vs EBAY
Financial Management Association September 23, 2011 16
Key FinancialsMarket Cap 101.33 BnEnterprise Value 94.98 BnBeta 0.90Trailing P/E 98.47Forward P/E 69.54PEG (5 yr expected) 4.25Price/Sales 2.52Price/Book 13.05Enterprise Value/Revenue 2.36Enterprise Value/EBITDA 51.98
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
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.
Recommendation - BUY