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US Internet Companies Presented by: Tiantian Wang Rustam Ong

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Outline Industry Analysis Industry Analysis Yahoo Inc. Yahoo Inc. Amazon.Inc. Amazon.Inc.

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Internet Industry Overview 679.7 Million people use the Internet 679.7 Million people use the Internet 10.76% 10.76% Specific Internet Service has opportunities Specific Internet Service has opportunities Estimated of Internet users is 940 M. (with a growth rate of 38.29%) in 2004 Estimated of Internet users is 940 M. (with a growth rate of 38.29%) in 2004

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Revenue by Segment 2001200220032004 North America $908.6$1,498.2$2,339.0$3,456.4 Asia Pacific $117.2$286.6$724.2$1,649.8 Western Europe $194.8$422.1$853.3$1,533.2 Latin America $6.8$13.7$31.8$81.8 Total ($ B) $1,233.6$2,231.2$3,979.7$6,789.8

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Internet Business Market Analysis 2003: Canadian GDP=>$ 860 Billion Canadian GDP=>$ 860 Billion Internet Business Revenue=>$3,980 Billion Internet Business Revenue=>$3,980 Billion

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Internet Overview (USA) 2002 Internet Users => 118 million 2002 Internet Users => 118 million 2003 Internet Users => 151 million 2003 Internet Users => 151 million %27.9 Growth from 2002-2003 %27.9 Growth from 2002-2003

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Significance of the US The online markets in the USA are still witnessing strong growth The online markets in the USA are still witnessing strong growth 22.2% of all Internet users are in the US. 22.2% of all Internet users are in the US. Americans form 4.4% of the world population. Americans form 4.4% of the world population.

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Online Activities Growth by U.S. Consumers 2000-2002 Growth rate 2000 -2002 (%) 2000 Number of U.S. Users, 20002002 Number of U.S. Users, U.S. Users,2002 % of all U.S. Users % of U.S.Users Bank online 16417 14 million 32 37 million Buy or make a reservation for travel 9036 31 million 50 59 million Buy a product 7848 41 million 62 73 million Participate in an online auction 6915 13 million 20 22 million Play a game 4534 29 million 37 42 million Buy or sell stocks 4012 10 million 12 14 million Get hobby information 3876 65 million 77 90 million Get financial information 3244 37 million 42 49 million

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Overview Overview Company Analysis Company Analysis Competitor Analysis Competitor Analysis Industry Analysis Industry Analysis Conclusion Conclusion

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Yahoo Inc. Overview Sector: Technology Sector: Technology Industry: Internet Information Provider Industry: Internet Information Provider Full Time Employees:7,600 Full Time Employees:7,600 Founded in 1995 by David Filo and Jerry Yang Founded in 1995 by David Filo and Jerry Yang It offers communications services, commerce services, content and media programming services, personalized information on wireless devices, corporate service It offers communications services, commerce services, content and media programming services, personalized information on wireless devices, corporate service Strategic Alliances : Microsoft Inc.; BT Group plc; Rogers Cable, Inc.; Alibaba.com Corporation; and Verizon Communications, Inc Strategic Alliances : Microsoft Inc.; BT Group plc; Rogers Cable, Inc.; Alibaba.com Corporation; and Verizon Communications, Inc

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Financial Analysis as of Nov 9 Symbol : YHOO Symbol : YHOO Listed: Nasdaq, S&P 500, S&P 1500 Supergroup Listed: Nasdaq, S&P 500, S&P 1500 Supergroup # of shares outstanding : 1.41B # of shares outstanding : 1.41B # of option outstanding: 212,701 # of option outstanding: 212,701 Stock price : $ 37.75 Stock price : $ 37.75 Market Capitalization : $53.19B Market Capitalization : $53.19B 52-week high : 39.79 52-week high : 39.79 low : 30.30 low : 30.30

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Financial Analysis Continues Price/Book:7.09 Price/Book:7.09 P/E :35.25 P/E :35.25 EPS:1.07 EPS:1.07 Div & Yield: 0 Div & Yield: 0 Return on Equity:23.31% Return on Equity:23.31% 11.02% held by Insiders 11.02% held by Insiders 72.3% held by Institutions 72.3% held by Institutions

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One Year Performance

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Five Year Performance

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Yahoo Inc. Management Team Terry Semel Chairman, Chief Executive Officer and Director Terry Semel Chairman, Chief Executive Officer and Director Join in May, 2001 Semel spent 24 years at Warner Bros., as chairman and co-chief executive officer Building Warner Bros. from a single revenue source generating less than $1 billion to $11 billion Semel managed Walt Disney's Theatrical Distribution division, and CBS' Theatrical Distribution division

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Yahoo Inc. Management Team Jerry Yang Co-founder, Chief Yahoo and Director Jerry Yang Co-founder, Chief Yahoo and Director 4.8% - 0% of Common Shares, as May 2005 4.8% - 0% of Common Shares, as May 2005 Jerry Yang, a Taiwanese native raised in San Jose, Calif., co-created the Yahoo! Internet navigational guide in April 1994 A member of Yahoo's board of directors Yang works closely with the company's president and CEO to develop corporate business strategies and guide the future direction

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Management Team Continue David Filo Co-founder and Chief Yahoo David Filo Co-founder and Chief Yahoo 6.3% Common Shares as Oct. 2005 6.3% Common Shares as Oct. 2005 A native of Moss Bluff, La., co-created the Yahoo in April 1994. Filo serves as a key technologist Help build Yahoo! into the world's most highly trafficked Web site and one of the Internet's most recognized brands.

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Yahoo Management Team PayExercised # Share Owned Arrival Time Mr. Terry S. Semel, 61 Chairman and Chief Exec. Officer $ 600.00K $ 229.95M 1,825,0002001 Ms. Susan Decker, 42 Chief Financial Officer $1.4 M $ 27.70M 298,9932000 Mr. Daniel L. Rosensweig, 43 Chief Operating Officer 1.93M $ 18.35M n/a2002 Mr. Farzad Nazem, 43 Chief Technology Officer and Exec. VP of Engineering and Site Operations 1.15M $ 60.22M 499,1601996 Mr. Michael Callahan, 36 Sr. VP, Sec. and Gen. Counsel $ 450.00K $ 1.79M n/a2003

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Summary of Income Statement

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Income Statement 4-Dec3-Dec2-Dec1-DecDec-00 4-Dec3-Dec2-Dec1-DecDec-00 Sales 3,564.521,625.10953.067717.4221,110.18 Sales 3,564.521,625.10953.067717.4221,110.18 Cost of Goods Sold 1,133.21100.20674.67890.511108.97 Cost of Goods Sold 1,133.21100.20674.67890.511108.97 Gross Profit 2,431.301,524.89878.389626.9111,001.21 Gross Profit 2,431.301,524.89878.389626.9111,001.21 General Administrative General Administrative Expense 1,441.68916.954680.812592.385611.501 Expense 1,441.68916.954680.812592.385611.501 Operating Income Before Deprec. 989.622607.937197.57734.526389.707 Operating Income Before Deprec. 989.622607.937197.57734.526389.707 Depreciation/Amortization 311.041159.688109.389130.57569.102 Depreciation/Amortization 311.041159.688109.389130.57569.102 Operating Profit 678.581448.24988.188-96.049320.605 Operating Profit 678.581448.24988.188-96.049320.605 Interest Expense 0000n/a Interest Expense 0000n/a Non-Operating Income/Expense 178.43494.20889.92768.138-33.701 Non-Operating Income/Expense 178.43494.20889.92768.138-33.701 Special Items 423-151.6331.661-53.221-22.785 Special Items 423-151.6331.661-53.221-22.785 Pretax Income 1,280.02390.824179.776-81.132264.119 Total Income Taxes 437.966147.02471.2910.963188.045 Total Income Taxes 437.966147.02471.2910.963188.045 Minority Interest 2.4965.9211.5510.6935.298 Minority Interest 2.4965.9211.5510.6935.298 Income before Extraordinary Income before Extraordinary Items & Discontinued Operation 839.553237.879106.935-92.78870.776 Items & Discontinued Operation 839.553237.879106.935-92.78870.776 Preferred Dividends 00000 Preferred Dividends 00000 Available for Common 839.553237.879106.935-92.78870.776 Available for Common 839.553237.879106.935-92.78870.776 Adjusted Available for Common 839.553237.879106.935-92.78870.776 Adjusted Available for Common 839.553237.879106.935-92.78870.776 Extraordinary Items 00-64.1200 Extraordinary Items 00-64.1200 Discontinued Operations 00000 Discontinued Operations 00000 Adjusted Net Income 839.553237.87942.815(92.788)70.776

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Income Statement by Segment

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Summary of Revenue By Segment

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Revenue Analysis

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Expense Analysis

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Balance Sheet Balance Sheet

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Summary of Balance Sheet

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Debt Payment Due

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Cash Flow Analysis

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Five Year Key Cash Flow Statement

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Historical Free Cash Flow

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Acquisitions

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Acquisition by Segment

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Acquisitions Continues

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Quarterly Analysis

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Q1 04 Q204Q304Q404Q105Q25Q305 US31%31%35%39%35%35%34% Interna tional 12%17%15%19%32%31%30% World wide 28%28%30%34%34%34%33% Operation Income as a Percentage of Gross Profit by Segment

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Continues

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Competitor Analysis

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Major Competitors Google Inc. Google Inc. Microsoft Inc. Microsoft Inc. American Online Inc. American Online Inc. Internet providers and searching engines Internet providers and searching engines

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Competitor Analysis Yhoo YhooGOOGIndustry Market Cap 53.19B105.88B163.43M Qtrly Rev Growth 46.70%95.90%30.40% Revenue4.83B5.25B46.24M Net Income 1.59B1.30B2.94M P/E35.2583.9933.76 EPS1.0714.5140.03 Employees7,6003,021160

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Five Year Competitive Performance

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One Year Competitive Performance

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Recent Trends 10-12-05 10-12-05 Microsoft and Yahoo! Announce Landmark Interoperability Agreement to Connect Consumer Instant Messaging Communities Globally Microsoft and Yahoo! Announce Landmark Interoperability Agreement to Connect Consumer Instant Messaging Communities Globally 10-26-05 10-26-05 Microsoft joins Yahoo on digital library alliance 11-07-05 Yahoo! Announces Plans to Purchase Remaining Shares of Yahoo! Europe and Yahoo! Korea 11-07-05 Yahoo! Announces Plans to Purchase Remaining Shares of Yahoo! Europe and Yahoo! Korea 11-03-05 Yahoo! Introduces New Mapping Service With Focus On Interactivity, Ease Of Use And Personalization 11-03-05 Yahoo! Introduces New Mapping Service With Focus On Interactivity, Ease Of Use And Personalization

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Philip Fisher Approach Functional Factors Functional Factors Focus on customer experienced by convenience, and wide selection of products and services through on line Focus on customer experienced by convenience, and wide selection of products and services through on line People Factors People Factors Experienced officers and directors Experienced officers and directors Essential Business Characteristic Essential Business Characteristic Fierce competition and strategic alliances Fierce competition and strategic alliances Value of stock Value of stock High P/E High P/E No dividend No dividend Risk is high Risk is high

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Result??? HOLD HOLD Watch the news regarding Yahoo and Microsoft digital alliance Watch the news regarding Yahoo and Microsoft digital alliance

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Financial Analysis as of Nov 8 Symbol : AMZN Symbol : AMZN Listed in Nasdaq stock market Listed in Nasdaq stock market # of shares outstanding : 410,690,180 # of shares outstanding : 410,690,180 Stock price : $ 41.95 Stock price : $ 41.95 Market Capitalization : $17.39 B Market Capitalization : $17.39 B 52-week high : $47.00 52-week high : $47.00 low : $30.60 low : $30.60 Dividend : Never paid cash dividend Dividend : Never paid cash dividend

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Five Year Performance

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History Incorporated in July 1994 by founder and CEO Jeff P. Bezos. Incorporated in July 1994 by founder and CEO Jeff P. Bezos. Opened the virtual doors of Amazon.com's online store in July 1995. Opened the virtual doors of Amazon.com's online store in July 1995. Went public on May 15, 1997, and the price was $18.00, Went public on May 15, 1997, and the price was $18.00, $1.50 adjusted for the stocks splits that occurred on June 2, 1998 (2-for-1 split), January 5, 1999 (3-for-1 split), and September 1, 1999 (2-for-1 split). $1.50 adjusted for the stocks splits that occurred on June 2, 1998 (2-for-1 split), January 5, 1999 (3-for-1 split), and September 1, 1999 (2-for-1 split).

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Corporate Committee Jeffrey P. Bezos Founder, President, and CEO as well as Chairman of the board since 1994 Jeffrey P. Bezos Founder, President, and CEO as well as Chairman of the board since 1994 Rick Dalzell Senior VP, Worldwide Architecture and Platform software, and Chief Information Officer since 2001. (Joined amazon.com in 1997) Rick Dalzell Senior VP, Worldwide Architecture and Platform software, and Chief Information Officer since 2001. (Joined amazon.com in 1997) Jeffrey Holden Senior VP, Discovery since 2005. Jeffrey Holden Senior VP, Discovery since 2005. (Joined Amazon.com in 1997) (Joined Amazon.com in 1997) Jason Kilar Senior VP, Worldwide Application Software since 2003 Jason Kilar Senior VP, Worldwide Application Software since 2003 (Joined Amazon.com in 1997) (Joined Amazon.com in 1997) Mark S. Peek VP, Chief Accounting Officer since 2000 Mark S. Peek VP, Chief Accounting Officer since 2000 Tom Szkutak Senior VP, Chief Financial Officer since 2002 Tom Szkutak Senior VP, Chief Financial Officer since 2002 (former CFO of GE) (former CFO of GE) Diego Piacentini Senior VP, Worldwide retail and marketing since 2000 Diego Piacentini Senior VP, Worldwide retail and marketing since 2000 Kal Raman Senior VP, Worldwide hardlines retail since 2004 Kal Raman Senior VP, Worldwide hardlines retail since 2004 (former CEO of drugstore.com) (former CEO of drugstore.com) Jeff Wilke Senior VP, Worldwide operation and customer service since 1999 (Former GM of pharmaceutical fine chemicals) Jeff Wilke Senior VP, Worldwide operation and customer service since 1999 (Former GM of pharmaceutical fine chemicals)

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Qualitative Analysis Business Strategy Business Strategy Price (low everyday product pricing and free shipping cost) Price (low everyday product pricing and free shipping cost) Convenience (easy to use program) Convenience (easy to use program) Such as 1 Click technology, secure payment system Such as 1 Click technology, secure payment system Selection (widest possible selection) Selection (widest possible selection) Baby care products, office supplies, electronics Baby care products, office supplies, electronics Competition Competition Physical world retailer, catalog retailer, publishers, vendors Other online e commerce sites: ebay Indirect competitors, including media companies, web search engines Companies that provide e-commerce services

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Qualitative Analysis Operates in seven retail websites Operates in seven retail websites US, Canada, UK, Germany, Japan, and France Intellectual property Intellectual property They regard their trademarks, service marks, copyrights, patents, domain names, trade dress, trade secrets, proprietary technologies, and similar intellectual property as critical to their success Employees Employees 9,000 full-time and part-time employees at December 31, 2004. Also utilize independent contractors and temporary personnel on a seasonal basis. None of the employees is represented by a labor union. Competition for qualified personnel in the industry is intense, particularly for software engineers, computer scientists, and other technical staff.

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Consolidated Financial Statement

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Risk Factors Foreign exchange risk Accumulated deficit and may incur additional losses Significant indebtedness Intense competition Expansion into international market segments may not be successful The seasonality of business places increased strain on operations Recent acquisition of Joyo.com creates risks and uncertainties relating to the laws of the peoples republic of China Dependency of particular key senior management System interruption and the lack of integration and redundancy in the systems may affect sales Significant inventory risk

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Key Income Statements 2004200320022001200019991998 Net sales $6,921$5,264$3,933$3,123$2,762$1,639.80$610 Cost of sales $5,319$4,006$2,941$2,324$2,105.20$1,281.80$145.9 Gross Profit $1,602$1258$992$799$656.8$358$464.1 SGA expenses $910.38$778.76$712.88$969.65$703.45$673.7$195.6 Net Income $58$35$(149)$(567)$(1,411.27)$(720)$(124.5)

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Segmented Information Calendar Years Ended December 31, North America2004200320022001 Net sales $ 3,847 $ 3,259 $ 2,761 $ 2,461 Cost of sales 2,823 2,392 2,020 1,802 Gross profit 1,024 867 741 659 Direct segment operating expenses (1) 703 583 562 600 Segment operating income (loss) 321 284 179 59 International Net sales 3,074 2,005 1,172 662 Cost of sales 2,496 1,614 921 522 Gross profit 578 391 251 140 Direct segment operating expenses (1) 411 313 250 243 Segment operating income (loss) 167 78 1 (103)

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Net Sales Breakdown Calendar Years Ended December 31, North America 2004200320022001 Media $ 2,589 $ 2,589 $ 2,270 $ 2,270 $ 1,995 $ 1,995 $ 1,811 $ 1,811 Electronics and other general merchandise 1,128 1,128 879 879 681 681 578 578 Other 130 130 110 110 85 85 72 72 3,847 3,847 3,259 3,259 2,761 2,761 2,461 2,461 International Media 2,513 2,513 1,780 1,780 1,104 1,104 645 645 Electronics and other general merchandise 559 559 225 225 66 66 15 15 Other 2 - 2 2 3,074 3,074 2,005 2,005 1,172 1,172 662 662

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Key Balance Sheet Items 20042003200220012000 Current Assets 2,539.401,820.811,615.681,207.921361.13 Fixed Assets 709.12341.23374.77762.41774.05 Total Assets 3,248.512,162.031,990.451,635.552,135.17 Current Liabilities 1,620.401,252.701,065.96921.41974.96 Convertible debt 3,669.693,838.943,948.613,717.19n/a Long term debt -1,822.81-1,914.73-1,716.07-1,588.192,127.46 Other8.4421.2344.7627.13n/a Total Liabilities 3,475.723,198.143,343.263,077.553,102.42 Shareholders equity -227.21-1,036.11-1,352.811,440-967.25

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Cash Flow Analysis 20042003200220012000 Cash flow from Operating 556.56392.02174.29-119.78-130.44 Cash flow from Investing -317.63236.65-121.68-253.29163.98 Cash flow from Financing -97.29-331.99106.89106.88696.15 Effect on Exchange in Cash 48.6967.3338.47-15.9637.56 Cash at beginning of year 1,102.27n/a540.28822.44133.31 Cash at end of year 1,302.60n/a738.25540.28822.44 Net change in cash 200.33364.02197.97-282.15689.13

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Free Cash Flow 19971998199920002001200220032004 Q1 05 Q2 05 Q3 05 Operating Cash Flow 131-91-130-120-174392567523624661 Less: Purchased of fixed assets 82828713550394689106138186 FCF-73-378-265-170135346477417486475

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One Year Performance

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Performance Trend Quarterly

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Segment Breakdown

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Expected Performance in 2005 Net sales are expected to be between $8.373 billion and $8.673 billion, or grow between 21% and 25%, compared with 2004. Net sales are expected to be between $8.373 billion and $8.673 billion, or grow between 21% and 25%, compared with 2004. Operating income is expected to be between $403 million and $478 million, or between (9%) decline and 8% growth, compared with 2004. Operating income is expected to be between $403 million and $478 million, or between (9%) decline and 8% growth, compared with 2004.

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Current Ratio Analysis AmazonIndustry Price / Earning Ratio 36.0451.7 Price / Book Value -190.279.6 Net profit margin 8.502.33 Return on Equity -2.59%7.8% Total Debt / Equity -814.120.3 Dividend yield 05.2%

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Philip Fisher Approach Functional Factors Functional Factors Focus on customer experienced by offering low price, convenience, wide selection of products Focus on customer experienced by offering low price, convenience, wide selection of products People Factors People Factors Experienced officers and directors Experienced officers and directors Essential Business Characteristic Essential Business Characteristic Fierce competition Fierce competition Value of stock Value of stock High P/E High P/E No dividend No dividend Stock price is highly volatile Stock price is highly volatile

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Recommendation HOLD

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Sources http://yhoo.client.shareholder.com/index.cfm http://yhoo.client.shareholder.com/index.cfm www.amazon.com www.amazon.com Research Insight Research Insight Previous Internet Presentation Previous Internet Presentation