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In the latest round of controversies concerning “new economy” investment
analysis, professionals are divided over a rigorously traditional credit
review which questions Amazon.com’s prospects as a “going concern.”
Company officials have publicly called the traditional analysis “silly
and chock full errors,” and some prominent analysts have supported
Amazon’s argument that the standard working capital metrics developed
for “land-based” companies do not apply to e-tailers. But is this
debate about “new economy” theories really relevant?
Both analyst camps agree that the extreme differences between
projections of financial crisis and stability depend on whether
suppliers continue to extend trade credit. Under these circumstances,
it’s been suggested that there’s only one very practical question that
matters:
How will the real-world credit managers employed by Amazon’s
suppliers make the decisions that count?
We are asking Amazon to continue its participation in the Forum to
explain why management believes the company’s suppliers will extend the
trade credit assumed in their projections. Investment professionals who
disagreed with the traditional credit review are also invited to present
their views at the meeting.
The meeting is open to the public and the press. It is part of the
continuing NYSSA Forum, "Amazon.com: Responsibility for Investment
Information," initiated in June 2000 as a case study to examine what the
evolving marketplace expects of company executives and directors,
auditors, regulators, journalists, and others who share a common
interest with securities analysts in providing information for
investment decisions. The Forum is conducted by NYSSA's Committee for
Corporate Governance and Shareholder Rights, chaired by Peter F.
Brennan, and co-sponsored by Gary Lutin. Additional information about
this and other Forum programs can be found at <http://www.nyssa.org/governance/forums.html>.
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