Bezos & Co. has authorized a debt repurchase program that it may repurchase, redeem or retire, up to all of its outstanding 4.75% convertible subordinated notes due 2009 with an outstanding balance of $899 million in principal; and it can repurchase, redeem, or retire its 6.875% convertible subordinated Notes due 2010 that has a currency converted balance of some $350 million or so outstanding. This debt repurchase authorization will replace a February 2006 $500 million debt repurchase authorization.  The debt matures next year and the year after, so it will probably just allow these to mature without replacing them. 

But Bezos & Co. is also announcing a $1 Billion share buyback plan over the next 24-months, which will replace the existing $500 million stock buyback plan put in place in April 2007.

While Amazon stock has pulled back some 30% from its 2007 highs of $101.09, this stock is actually up roughly 75% off of its lows and up 130% or so from lows over the last two-years. 

Are there no acquisitions out there that can be made with that $1 Billion?  With a forward P/E ratio for 2008 of 45 and with a near-$30 Billion market cap it can almost certainly find attractive buyout targets that would add another growth driver and simultaneously take out competition.

Taking away debt.. that’s good.  But at $70.00 a $1 Billion buyback wouldn’t even be a day and half of average share trading volume. 

Dear Mr. Bezos, kill the debt.  But kill the stock buyback too.

Jon C. Ogg
February 8, 2008

Bezos & Co. also offered guidance for next quarter of $155 to $200 million in operating income, up 7% to 38%; $3.95 billion and $4.15 billion in revenues, a gain of 31% to 38% year over year.  Next quarter’s estimates are $0.35 EPS and $3.92 billion in revenues.

For 2008, Bezos offered up guidance of $785 to $985 million in operating income and $18.75 to $19.75 Billion in revenues; while the estimates for 2008 are $1.63 EPS and $18.25 billion in revenues.

Its shipping revenues also grew some 38% to $265 million.  Outbound shipping costs totaled $449 million, up 42% from $317 million in Q4-2006. Net shipping cost was $184 million, or 3.2% of net sales.

Amazon.com also ended the year out with over $3 Billion in net cash and equivalents

Amazon.com shares closed up 0.35% at $74.21 in regular trading, and shares are down some 4% at $71.25 in after-hours trading.

Jon C. Ogg
January 30, 2008

Analysts have fairly aggressive price targets on Amazon with an average north of $98.00.  We’d note that shares have traded as low as $36.63 and as high as $101.09 over the last year.  Up until the last pullback this has spent most of the last four months in an $80 to $100 trading band, although we’d caution that $95 or so was the top of that band on all but one day.  Shares have also been hanging out for the last week or more under the 200-day moving average, which was $78.72 on last look.

Options are almost impossible to use for a predicting tool today with a high VIX, high event risk, and high volatility.  If you want a guess at options as a prediction, options traders appear to be braced for a move of more than $7.25 in either direction.  The short interest is also a must-see ahead of earnings, and as of mid-January the short interest was 31.4+ million shares (up 1.5% from December-end).

We do not know if Bezos & Co. will go out on a limb and offer any targets for 2008.  But we are fairly certain that 2007 will be an important benchmarking for analysts as they try to come up with 2008 targets.  Even with the recent sell-off we’ve seen, it doesn’t look like the analysts are going to line up in defense of Amazon.com if it makes any comments that are overly cautious ahead. 

If the company meets the 2007 target, its trailing P/E ratio will be 66.  With a target of $1.63 expecting almost 45%  earnings growth, this forward P/E ratio is still 45.3 for 2008 targets.  Sometimes valuations do matter, particularly when you are teetering on a recession or a bear market.

Jon C. Ogg
January 30, 2008 

Shares are up almost 6% ahead of today’s earnings.  This last quarter is always sort of the throw-away quarter, but the quarter guidance will be covering what should be the largest Amazon quarter ever.  First Call has estimates for this past quarter at $0.18 EPS and $3.14 Billion revenues, and more importantly it has the current quarter ahead estimates at $0.46 EPS on revenues of nearly $5.2 Billion.  In the event we get some business model numbers for 2008, First Call has estimates roughly of $1.55 EPS on $17.6 Billion in revenues.

After you see the individual metrics, you may feel wishy washy on how to call this one.  Analysts as a group are nearly impossible to use for a target reading because price targets are well above and well below the current stock price.  Options trader expectations are hard to peg as well, because on one calculation I derive less than a $5.00 move and one more than an $8.00 move being priced in (shares moved much more in the last two-quarters).  Its chart is also hard to call because shares hit a new high on a gap-up day after being is a solid $89 to $92 range for the last few days.

What is obvious is that this 36.8 million share short interest at the end of September is going to play a major factor, even if the short interest is lower than during the last two reports.  The biggest focus here will be guidance, at least barring anything massive about the last quarter.

• GOOG $1,000 from analysts?
• Overstock.com launched on earnings.
• September short interest in internet stocks.

Jon C. Ogg
October 23, 2007

• Cisco Systems (NASDAQ:CSCO) is going to keep delivering and he has broken out of his past quiet-man role.
• Google (NASDAQ:GOOG) is just getting better and better after being held back a year, and it grew 9% year over year by comScore data. This is one of Cramer’s "New Four Horsemen of Tech" and he thinks it goes higher.
• Freeport McMoran (NYSE:FCX) is growing from everywhere outside the U.S. that has a lock on the copper market.
• Amazon.com (NASDAQ:AMZN) is another pick from his "New Four Horsemen of Tech" that just hit a new year high today.

Here are his Tight End picks from last night that have upside with dividend stocks.  Yesterday he also gave his "wide receiver picks" that are the aggressive big scoring stocks.  Monday night he gave his picks that were not defensive, but still the leaders as the quarterback.  But before that he gave his solid Defensive linemen picks that are defensive stock picks

Jon C. Ogg
September 12, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he produces the 24/7 Wall St. Special Situation Investing Newsletter and he does not own securities in the companies he covers.