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The Cult of Amazon.com

Of course, cloud computing is just one part of the Amazon technology story. It's also one of the leading streaming media companies, competing with Netflix (NFLX). Rocco Pendola says Amazon could squash Netflix "like a bug" and, even with Netflix' recent explosive run up, its one-year performance still trails that of AMZN, 41% to 30%.

But what's streaming worth? Netflix' total revenue for 2012 were about $3.6 billion. Even if Amazon did as well, that and the cloud business are still just gnats on the balance sheet elephant.

So be generous and toss in the Kindle business. Pacific Crest told Barron's Amazon might sell 10.5 million Kindle Fire tablets in 2013 . That's revenue of $2.5 billion over the course of this coming year.

In his most recent conference call, Bezos said e-book revenue were $9.19 billion. Let's call e-books tech, too, and not retailing.

Now add it all up and, like I said, be generous. Add Macquarie's $3.8 billion in cloud to Netflix' $3.6 billion in streaming, toss in $2.5 billion for Kindle players and $9.2 billion in e-book revenue. That's $19 billion in technology revenue, from all sources, you can expect in 2013.

Amazon.com did $21 billion in revenue during the fourth quarter of 2012 alone, Gigaom.com writes.

Figure you're paying Wal-Mart's valuation on the straight retail sales, take out all its cash, about $5 billion, and you're still paying $90 billion for a tech business that may do $19 billion in business this year. That's a ratio of 4.5 times sales.

There are crazier prices on the technology board. Facebook (FB) shareholders pay 18 times revenue for their shares. But you can get Google (GOOG) for 4.95 times sales, and Oracle (ORCL) for 4.52 times sales. That's real tech revenue, every dime of it.

Personally, I love Amazon. I think it's worth $200/share, which by my very optimistic, back-of-the-envelope calculation still comes to a valuation comparable with that of Apple. But it's no surprise that, to people who do this for a living, Amazon's stock chart looks a lot like Netflix' from 2011, just before its fall. It's a cult classic, and investing on it at these levels could prove a very scary movie indeed.

At the time of publication the author had positions in MSFT, GOOG, INTC, AAPL and COST.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
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