1. TODAY’S CLASS 5:00-6:30 Crossfire: Valuation 6:30-6:45 Break
6:45-7:40 Case discussion: Amazon.com

2. excite@Home NEXT CLASS GUEST SPEAKER Steve Harris Topic:
“Using Customer Data to Develop
Evaluation Metrics”

3. Homework due next session
Prepare Case: Chapter 7
Prepare Crossfire: : Metrics for evaluating
e-Businesses

4. Amazon.com Snapshot - Bezos started Amazon in 1995 with a
customer focus
- Metrics (1999)
Revenues $1.6 B
Net loss $720 M
Employees 7,600
Markets:
Books (54%), music, DVDs, videos, toys,
electronics, software, video games, home
improvements, and lawn and patio

5. Disagreement Over Goals
Amazon Management Shareholders
- Growth in new industries - Profitability
- Partnership/affiliations - Positive cash flow
- Market share - Higher stock price
How do you merge these goals and develop
a strategy to meet the vision of becoming
Earth’s Biggest Store?

6. Traditional Models for Valuing Common Stock
Choices for
parameters:
Which measure
of income?
Whose
perspective?
Which discount rate?
Which
growth rate?

7. Traditional Models for Valuing Common Stock
Choices for
parameters:
Which measure
for multiple?
Which
comparison?
Raw or adjusted multiple?
What time period for comparison?

8. New Models for Valuing Internet Stocks
Choices for
parameters:
Which multiple measures?
Which
comparison?
Raw or adjusted multiple?
What time period for comparison?

9. A Pretty Web Site is not Enough

18. Top Ten E-Business CSFs

19. “The Amazon.com platform is comprised of brand,
customers, technology, distribution capability, deep
EC expertise, and a great team with a passion for
innovation and serving customers well…
We believe that we have reached a ‘tipping point,’
where this platform allow us to launch new EC
businesses faster, with a higher quality of customer
experience, a lower incremental cost, a higher chance
of success, and a clearer path to scale and profitability
than perhaps any other company.”
Jeff Bezos
1999 Annual Report

20. “The Amazon.com platform is comprised of
brand, customers, technology, distribution
capability, deep e-commerce expertise, and a
great team with a passion for innovation and
serving customers well.”
Jeff Bezos
1999 Annual Report

21. “We believe that we have reached a ‘tipping
point,’ where this platform allow us to launch
new e-commerce businesses faster, with a
higher quality of customer experience, a lower
incremental cost, a higher chance of success,
and a clearer path to scale and profitability
than perhaps any other company.”
Jeff Bezos
1999 Annual Report

22. The key to valuing companies is understanding
the market’s consensus forecast for their key
value drivers, how their cost of capital changes
over time, and the shape that their industry
competition will take a decade or more from now.