Troy Wolverton

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Scouring Amazon for the Shipping News

01/23/03 - 07:13 AM EST

Troy Wolverton

"The challenge for Amazon is to demonstrate that it can obtain double-digit operating margins," said Jeetil Patel, who covers the company for Deutsche Bank-North America.

Achieving such margins could be crucial for the company's shares. Any slowdown in sales or earnings growth could send the company's stock tumbling. Amazon shares are trading at about 176 times the company's expected 2002 pro forma earnings and about 88 times its projected 2003 pro forma earnings.

Pro forma earnings, frequently used by Wall Street analysts, typically exclude items such as one-time charges and gains, and charges due to stock-based compensation or changes in the valuation of foreign currency-denominated debt.

In contrast, eBayEBAY, which has been growing far faster than Amazon, is trading at about 67 times its projected 2003 earnings and about 58 times its projected pro forma 2003 earnings.




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Troy Wolverton



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