Problem: analyzing a dot-com business using information from the financial statement, then interpret those information and determine the company’s success. Required business skills
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Tom Yanlong Li April 20, 2009 BUS340 - 001
Amazon.com, Inc. Analysis
Amazon.com, Inc. was founded by Jeff Bezos back in 1994, one year later the official online site launched. Amazon.com primarily served as an online store that was catering toward to book readers, started as earth’s biggest online bookstore. But soon Amazon.com diversified their online store products to various product lines, they now sell electronics, CD/DVDs, softwares, video games, and many other consumer level products. And in recent years, Amazon.com also started their own music and video download services, that compete with Apple’s iTune service. In late 2007, Amazon.com released their software and hardware platform for reading electronic books, called Amazon Kindle. The idea behind this platform is that book readers will be able to read any books on a device the size of a regular book, but can store thousands of books and download books wireless without connecting to a computer thanks to its build-in EVDO wireless connection. Perhaps the single most important distinction between Amazon.com and many other online retailers is that Amazon.com offers FREE shipping to any order that is over $25. And keeping the shipping costs to a minimum is a constant on-going issue that Amazon.com, Inc. has to deal with. Therefore, this analysis answers the following questions:
In recent years, Amazon.com, Inc. is no doubt a dot.com success, they are ranked #130 in FORTUNE 500, they are a S&P 500 company, and ranked #301 in FT Global 500. In 2008, Amazon.com had revenue of $19,166 million dollars, with gross profit of $4,270 million dollars. And their total net income was $645 million dollars. Currently, Amazon.com, Inc. stock sells around $77.81 per share despite the current economic downturn. All the information are based on the company’s financial statement that includes the income statement and balance sheets, other company information are from Hoovers.com and stock price from Yahoo! Finance. When determine the company’s success in the business world, one must look at the company’s financial statement, especially their income statements. When comparing Amzon.com, Inc.’s three year total revenues: 2008 - $19,166 million; 2007 - $14,835 million; 2006 - $10,711 million. The positive growth shows exactly just how successful the Amazon.com is. After all the expenses are factored in, the operating income for the three years are 842 million, 655 million and 389 million respectively. Another way to see the positive growth of the company is to look at the company’s stock price over the years. Amazon.com, Inc. went on the stock market in May 1997 and it was only selling around $1.73. But soon it reached its peak selling around $100 in 2000, soon after the dot.com bubble burst, the company stock began to slowly decline, but soon it started to recover around 2003 and 2004, and increasing steadily despite couple dips, and now Amazon.com stock sells around $77.81. Again, another positive growth trend for the company. Amazon.com, Inc. is quite successful in the marketplace, and I believe it will continue to do so in the near future. To make Amazon.com even more successful, I think they should further diversified their product lines, looking back to the early days of Amazon.com, you can see just how narrow their product offerings were – only books. Because of that, they suffered; they were not doing so well back then as they do today. Therefore, they should continue bringing more consumer level products to their sites, offer prices that no retail stores can beat, and of course, still offer free shipping. They should work with shipping carriers more closely to make shipping faster and more affordable to products that cannot be free delivered. Finally, continue on their research and development, continue promoting the benefits of electronic books and their Kindle platform, and make the device and service more affordable. Because right now, the price of Kindle is just too high for average consumers to even consider. At this age of digital distribution and online e-commerce, Amazon.com is at the forefront of the online business market. Only by staying ahead of its competition, can Amazon.com survive the harsh and brutal e-business environment. Download 9.61 Kb. Share with your friends:
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