US Internet Companies Presented by: Tiantian Wang Rustam

US Internet Companies Presented by: Tiantian Wang Rustam

US Internet Companies Presented by: Tiantian Wang Rustam Ong Outline Industry Analysis Yahoo Inc. Amazon.Inc. Internet Industry Overview 679.7 Million people use the Internet 10.76% Specific Internet Service has opportunities Estimated of Internet users is 940 M. (with a growth rate of 38.29%) in 2004 Revenue by Segment 2001

2002 2003 2004 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 $6,789.8 Internet Business Market Analysis 2003: Canadian GDP=>$ 860 Billion Internet Business Revenue=>$3,980 Billion Internet Overview (USA) 2002 Internet Users => 118 million 2003 Internet Users => 151 million

%27.9 Growth from 2002-2003 Significance of the US The online markets in the USA are still witnessing strong growth 22.2% of all Internet users are in the US. Americans form 4.4% of the world population. Online Activities Growth by U.S. Consumers 2000-2002 2000 Number 2002 Number of of Growth % of all % of U.S. U.S. rate U.S. U.S.Us Users Users, Users ers 2000 ,

2002 2002 (% 2000 ) 164 17 14 millio n 32 37 million Buy or make a reservation for travel Buy a product 90 36 50 59 million 78 48 62 73 million Participate in an

online auction 69 15 31 millio n 41 millio n 13 millio n 20 22 million Bank online Overview Company Analysis Competitor Analysis Industry Analysis Conclusion Yahoo Inc. Overview

Sector: Technology Industry: Internet Information Provider Full Time Employees:7,600 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 Strategic Alliances : Microsoft Inc.; BT Group plc; Rogers Cable, Inc.; Alibaba.com Corporation; and Verizon Communications, Inc Financial Analysis as of Nov 9 Symbol : YHOO Listed: Nasdaq, S&P 500, S&P 1500 Supergroup # of shares outstanding : 1.41B # of option outstanding: 212,701 Stock price : $ 37.75 Market Capitalization : $53.19B 52-week high : 39.79 low : 30.30

Financial Analysis Continues Price/Book:7.09 P/E :35.25 EPS:1.07 Div & Yield: 0 Return on Equity:23.31% 11.02% held by Insiders 72.3% held by Institutions One Year Performance Five Year Performance Yahoo Inc. Management Team 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 Yahoo Inc. Management Team Jerry Yang Co-founder, Chief Yahoo and Director 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 Management Team Continue David Filo Co-founder and Chief Yahoo 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.

Yahoo Management Pay Team Exercise # Share Arrival d Mr. Terry S. Semel , 61 Chairman and Chief Exec. Officer $ 600.00K Ms. Susan Decker , 42 Chief Financial Officer $1.4 M Mr. Daniel L. Rosensweig , 43 Chief Operating Officer 1.93M Mr. Farzad Nazem , 43 Chief Technology Officer and Exec. VP of Engineering 1.15M $

229.95M $ 27.70M $ 18.35M $ 60.22M Owned Time 1,825,000 2001 298,993 2000 n/a 2002 499,160 1996 Options Outstanding Options Exercisable ----------------------------------------------------------------------- ------------------------------Range of Average Remaining Weighted Average Weighted Average Exercise Prices Number Contractual Life Exercise Price Number

Exercise Price per Share Outstanding (in years) per Share Exercisable per Share -------------------------------------------------------------------------------------------------------------------------------------$0.01 $ 0.71 3,027 1.50 $ 0.37 3,027 $ 0.37 $0.74 $ 3.37 3,559 3.00 2.77 3,476 2.78 $3.48 $ 5.05 18,830 6.80 4.63 10,389 4.60 $5.08 $ 9.06 37,126 7.20 8.00 18,031 8.04 $9.07 $ 15.00 24,028 6.50 12.75 15,836 13.20 $15.02 $ 20.31 9,215 6.90 17.19

3,122 17.21 $20.53 $ 30.00 54,087 7.90 24.10 26,067 25.79 $30.15 $ 35.95 15,964 6.10 34.58 11,122 35.26 $36.18 $ 46.37 32,029 7.70 38.26 13,173 39.99 $47.13 $ 292.07 14,836 5.20 73.72 14,817 73.71 ------------------------------------------------------------------------------------------------------Total 212,701 6.90 $ 23.67 119,060 $ 26.46 ------------------------------------------------------------------------------------------------------- Summary of Income Statement 4-Dec 3-Dec 2-Dec 3,564.52 1,625.10 953.067 1,133.21 100.206 74.678

2,431.30 1,524.89 878.389 1-Dec 717.422 90.511 626.911 Dec-00 1,110.18 108.97 1,001.21 916.954 680.812 989.622 197.577 34.526 448.249 88.188 390.824 179.776 592.385 389.707 -96.049 -81.132 611.501 -92.788 70.776 Sales Cost of Goods Sold Gross Profit General Administrative Expense 1,441.68 Operating Income Before Deprec.607.937 Operating Profit 678.581

Pretax Income 1,280.02 Adjusted Net Income 839.553 237.879 42.815 320.605 264.119 Income Statement 4-Dec 3,564.52 1,133.21 2,431.30 3-Dec 2-Dec 1,625.10 953.067 100.206 74.678 1,524.89 878.389 Sales Cost of Goods Sold Gross Profit General Administrative Expense 1,441.68 916.954 Operating Income Before Deprec. 989.622 607.937 Depreciation/Amortization 311.041 69.102 Operating Profit 678.581

448.249 Interest Expense 00 Non-Operating Income/Expense 178.434 94.208 Special Items 423 -22.785 Pretax Income 1,280.02 390.824 Total Income Taxes 437.966 147.024 Minority Interest 2.496 5.921 Income before Extraordinary Items & Discontinued Operation 839.553 237.879 Preferred Dividends 0 0 0 Available for Common 839.553 237.879 Adjusted Available for Common 839.553 237.879 Extraordinary Items 0 0 -64.12 Discontinued Operations 0 0 1-Dec 717.422 90.511 626.911

Dec-00 1,110.18 108.97 1,001.21 680.812 592.385 611.501 197.577 34.526 389.707 159.688 109.389 130.575 88.188 -96.049 0 0 89.927 68.138 -151.633 1.661 320.605 n/a -33.701 -53.221 179.776 71.29 1.551 -81.132 10.963 0.693 264.119 188.045 5.298 106.935 0 106.935 106.935 0 0

-92.788 0 -92.788 -92.788 0 0 70.776 70.776 70.776 0 Yearly Net Income $1,000,000 $839,553 $500,000 $237,879 $47,811 $70,776 $42,815 $1995 1996 1997 1998 1999 2000 Net Income

$(43,376) $(13,641) 2001 $(92,788) $(500,000) $(634,000) $(1,000,000) $(1,500,000) $(2,000,000) $(2,334,000) $(2,500,000) Year 2002 2003 2004 Income Statement by Segment ----------------------------------------------------------2002 2003 2004 ----------------------------------------------------------Segment operating income (loss) before depreciation and amortization: United States International

Total operating income before depre and Amor Revenue By Segment: United States International Total Revenues Coporate and unallocated operating costs and expenses Depreciation and amortization Stock compensation expense Income from operations Capital Expexditures, net United States International Total condolidated capital expenditures, net $ 212,721 $ (6,742) 205,979 $806,598 $146,469 $935,067 441,372 $ 36,011 477,383 $1,355,153 $269,944 $1,625,097 (109,389) (159,688) (8,402) (22,029) $ 88,188 $ 295,666 $ $42,193

$9,360 $51,553 $94,305 $23,024 $117,329 891,103 140,809 1,031,912 $2,653,437 $921,080 $3,574,517 (311,041) (32,290) 688,581 $190,461 $55,040 $245,501 Summary of Revenue By Segment Years Ended December 31, -------------------------------------------------------------------------------------------------------------2002 (1) 2003 (1) 2004 (1) -------------------------------------------------------------------------------------------------------------Revenues by segment: United States $ 806,598 85 % $ 1,355,153 83 % $ 2,653,437 74% International 146,469 15% 269,944 17% 921,080 26%

-------------------------------------------------------------------------------------------------------------Total revenues $ 953,067 100 % $ 1,625,097 100 % $ 3,574,517 100% -------------------------------------------------------------------------------------------------------------- Revenue Analysis Marketing services Fees Total revenues Years Ended December 31, -------------------------------------------------------------------------------------------------------2002 (1) 2003 (1) 2004 (1) -------------------------------------------------------------------------------------------------------$ 745,126 78 % $ 1,326,905 82 % $ 3,148,941 88% 207,941 22% 298,192 18% 425,576 12% -------------------------------------------------------------------------------------------------------$ 953,067 100 % $ 1,625,097 100 % $ 3,574,517 100% -------------------------------------------------------------------------------------------------------- Expense Analysis Stock compensation expense 1% General and administrative 9%

Product development 13% Sales and marketing 27% Amortization of intangibles 5% Cost of revenues 45% Balance Sheet Summary of Balance Sheet 2000 Cash, cash equivalents and marketable debt securities: Working capital: Total assets: Long-term liabilities: Total stockholders' Equity: 2001 2003 2004 $ 1,658,666 $ 1,471,993 $ 1,534,038 $ 2,566,215 $ 3,742,262 979,635

693,016 558,190 1,013,913 2,909,768 2,269,576 2,379,346 2,790,181 5,931,654 9,178,201 32,115 23,806 84,540 822,890 851,782 1,896,914 1,967,017 2,262,270 4,363,490 7,101,446 4-Dec 3-Dec 2-Dec 1-Dec Dec-00 3,511.98 1,309.52 774.176 926.427 1,150.23 479.993 282.415 113.612 68.648

90.561 0 ASSETS Cash & Equivalents Net Receivables Inventories 0 0 0 0 Prepaid Expenses 72.622 0 0 0 0 Other Current Assets 25.885 129.777 82.216 56.458

50.078 Total Current Assets 4,090.48 1,721.71 970.004 1,051.53 1,290.87 Gross Plant,Property & Equipment 919.705 762.316 576.738 250.029 181.475 Accumulated Depreciation 388.009 312.804 205.466 118.381 71.694

Net Plant,Property & Equipment 531.696 449.512 371.272 131.648 109.781 Investments at Equity 239.803 152.831 103.331 79.431 77.703 Other Investments 1,055.57 1,108.86 810.876 629.273 695.481 Intangibles

3,031.62 2,251.20 511.477 214.919 77.977 0 0 0 0 0 Other Assets 229.037 247.539 23.221 272.542 17.765 TOTAL ASSETS 9,178.20 5,931.65

2,790.18 2,379.35 2,269.58 0 0 0 0 0 Deferred Charges LIABILITIES Long Term Debt Due In One Year Notes Payable Accounts Payable Taxes Payable Accrued Expenses Other Current Liabilities Total Current Liabilities Long Term Debt Deferred Taxes Investment Tax Credit Minority Interest Other Liabilities 0 0 0

0 0 48.205 31.89 18.738 13.218 26.04 51.857 32.725 17.901 12.943 15.631 530.982 386.124 200.563 199.385 119.097 549.663 257.057

174.612 132.971 150.466 1,180.71 707.796 411.814 358.517 311.234 750 750 0 0 0 35.771 72.374 54.54 0 0 0

0 0 0 0 44.266 37.478 31.557 30.006 29.313 66.011 0.516 30 23.806 32.115 2,076.76 1,568.16 527.911 412.329 372.662

Preferred Stock - Redeemable 0 0 0 0 0 Preferred Stock - Nonredeemable 0 0 0 0 0 TOTAL LIABILITIES EQUITY Total Preferred Stock 0 0 0 0 0

Common Stock 1.416 0.678 0.611 0.581 0.562 Capital Surplus 5,654.34 4,288.82 2,430.22 2,067.41 1,830.53 Retained Earnings 1,605.68 233.984 -8.575 -40.986 65.826 Less: Treasury Stock

159.988 159.988 159.988 59.988 0 Common Equity 7,101.45 4,363.49 2,262.27 1,967.02 1,896.91 TOTAL EQUITY 7,101.45 4,363.49 2,262.27 1,967.02 1,896.91 TOTAL LIABILITIES & EQUITY 9,178.20

5,931.65 2,790.18 2,379.35 2,269.58 COMMON SHARES OUTSTANDING 1,383.58 1,321.41 1,189.72 1,151.04 1,123.30 Debt Payment Due Long-term debt(1) Operating lease obligations(2) Affiliate commitments(3) Non-cancelable obligations(4) Total contractual obligations Payments due by period ( in millions) ----------------------------------------------------------------------------------------------------------------------------Due in Due in Due in More than Total 2005 2006-2007 2008-2009 5 years ----------------------------------------------------------------------------------------------------------------------------$

750 $ - $ - $ 750 $ 409 44 75 67 223 390 99 291 75 59 16 ----------------------------------------------------------------------------------------------------------------------------$ 1,624 $ 202 $ 382 $ 817 $ 223 ----------------------------------------------------------------------------------------------------------------------------- Cash Flow Analysis Consolidated Statements of Cash Flows YAHOO! INC. Years Ended December 31 ( in thousands) 2002 2003 CASH FLOWS FROM OPERATING ACTIVITIES: Net income Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization Tax benefits from stock options

Cumulative effect of accounting change Earnings in equity interests Minority interests in operations of consolidated subsidiaries Stock compensation expense (Gains)/losses from sales of investments, assets, and other, net Changes in assets and liabilities, net of effects of acquisitions: Accounts receivable, net Prepaid expenses and other assets Accounts payable Accrued expenses and other liabilities Current deferred revenue Long-term deferred revenue Net cash provided by operating activities CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition of property and equipment, net Purchases of marketable debt securities Proceeds from sales and maturities of marketable debt securities Acquisitions, net of cash acquired Proceeds from the sales of marketable equity Security Other investing activities, net Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of debt, net Proceeds from issuance of common stock, net Repurchase of common stock Structured stock repurchase, net Net cash provided by (used in) financing activities Effect of exchange rate changes on cash and cash equivalents Net change in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year $

42,815 $ 109,389 60,406 64,120 (22,301) 1,551 8,402 (109) $ 237,879 $ 2004 839,553 159,688 124,852 (47,652) 311,041 408,976 (94,991) 5,921 22,029 2,496 32,290 11,047

(394,028) (30,798) 29,555 4,507 (9,904) 14,815 30,000 302,448 (122,220) 16,835 (12,889) (640) 33,294 428,144 (162,690) (12,217) (3,570) 113,953 49,008 1,089,821 (51,553) (1,644,880) (117,329) (4,686,286) (245,501) (3,449,155) 1,487,851 (189,168) 20,705 (6,962)

(384,007) 3,837,940 (376,236) 1,928 (2,354) (1,342,337) 2,642,621 (755,707) 502,806 12,087 (1,292,849) 78,190 (100,000) (21,810) 733,125 353,201 1,086,326 3,556 (99,813) 333,886 234,073 $ 9,686 181,819 234,073 415,892 650,525 (69,558) 580,967 $

29,892 407,831 415,892 823,723 Five Year Key Cash Flow Statement Years ended December 31, --------------------------------------------------------------------------------------------------- 2000 Revenues Income from operations Net cash provided by operating activities Net cash used in investing activities Net cash provided by financing activities 20001 $1,110,178 $717,422 $70,776 $(92,788) $509,707 $106,850 $(679,144) $(207,173) $355,279 $18,290 2002 2003 ------------------------$953,067 $1,625,097 $42,815 $237,879 $302,488 $428,144 $(384,007) $(1,342,337) $(21,810) $1,086,326

2004 $3,574,517 $839,553 $1,089,821 $(1,292,849) $580,967 $35,000,000 Historical Free Cash Flow $31,865,000 $30,000,000 $25,000,000 FCF Cash $20,000,000 $15,000,000 $10,000,000 $5,297,000 $5,000,000 $233,951 $92,107 $230,961 $456,877 $372,632 $415,892 $234,073 $823,723

$1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Acquisitions Purchase Amortizable Price Goodwill Intangibles --------------------------------------------2002 HotJobs Other acquisitions $ 439 13 $

282 7 $ 99 1 2003 Inktomi Overture 290 1,732 217 1,155 49 354 74 571 157 49 59 454 172 41 12 107 21 14 2004 3721

Kelkoo Musicmatch Other acquisitions Acquisition by Segment United States International Total -----------------------------------------------------------------------------------------Balance as of January 1, 2003 $ 327,082 $ 88,143 $ 415,225 Acquisitions and other 1,383,916 6,420 1,390,336 -----------------------------------------------------------------------------------------Balance as of December 31, 2003 1,710,998 94,563 1,805,561 Acquisitions and other 204,911 540,485 745,396 Reclassification (242,490) 242,490 -----------------------------------------------------------------------------------------Balance as of December 31, 2004 $ 1,673,419 $ 877,538 $ 2,550,957 Acquisitions Continues Cash paid for acquisitions Cash acquired in acquisitions Common stock and common stock options issued

in connection with acquisitions Years Ended December 31, -----------------------------------------------------------------------------------2002 2003 2004 -----------------------------------------------------------------------------------$ 242,452 $ 581,519 $ 815,136 (53,284) (205,283) (59,429) -----------------------------------------------------------------------------------$ 189,168 $ 376,236 $ 755,707 -----------------------------------------------------------------------------------$ 225,528 $ 1,428,259 $ 4,231 ------------------------------------------------------------------------------------ Quarterly Analysis Operation Income as a Percentage of Gross Profit by Segment Q1 04 US 31 % Inter 12 natio % nal Worl 28

dwid % e Q20 4 31% Q30 4 35% Q40 4 39% Q10 Q25 Q30 5 5 35% 35% 34% 17% 15% 19% 32% 31% 30% 28% 30% 34% 34% 34% 33% Continues 100% 28% 28% 34% 30% 34% 34%

31% 30% 33% 80% 60% 12% 19% 15% 17% 32% Worldw ide International US 40% 31% 20% 31% 35% 39% 35% 35% 34%

0% Q104 Q204 Q304 Q404 Q105 Q25 Q305 Outstanding Shares Breakdown 11% 81% 72% Insider and 5% Owners Institutional & Mutual Fund Owners % of Float Held by Institutional & Mutual Fund Owners Competitor Analysis Major Competitors Google Inc.

Microsoft Inc. American Online Inc. Internet providers and searching engines Competitor Analysis Market Cap Qtrly Rev Growth Revenue Net Income P/E EPS Yhoo 53.19B GOOG Industry 105.88B 163.43M 46.70% 95.90% 30.40% 4.83B 1.59B 5.25B 1.30B 46.24M 2.94M

35.25 1.071 83.99 4.514 33.76 0.03 Five Year Competitive Performance One Year Competitive Performance Recent Trends 10-12-05 Microsoft and Yahoo! Announce Landmark Interoperability Agreement to Connect Consumer Instant Messaging Communities Globally 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 11-03-05 Yahoo! Introduces New Mapping Service With Focus On Interactivity, Ease Of Use And Personalization

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

Watch the news regarding Yahoo and Microsoft digital alliance Financial Analysis as of Nov 8 Symbol : AMZN Listed in Nasdaq stock market # of shares outstanding : 410,690,180 Stock price : $ 41.95 Market Capitalization : $17.39 B 52-week high : $47.00 low : $30.60 Dividend : Never paid cash dividend Five Year Performance History Incorporated in July 1994 by founder and CEO Jeff P. Bezos. 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, $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). Corporate Committee 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) Jeffrey Holden Senior VP, Discovery since 2005. (Joined Amazon.com in 1997) Jason Kilar Senior VP, Worldwide Application Software since 2003 (Joined Amazon.com in 1997) Mark S. Peek VP, Chief Accounting Officer since 2000 Tom Szkutak Senior VP, Chief Financial Officer since 2002 (former CFO of GE) Diego Piacentini Senior VP, Worldwide retail and marketing since 2000 Kal Raman Senior VP, Worldwide hardlines retail since 2004 (former CEO of drugstore.com)

Jeff Wilke Senior VP, Worldwide operation and customer service since 1999 (Former GM of pharmaceutical fine chemicals) Qualitative Analysis Business Strategy Price (low everyday product pricing and free shipping cost) Convenience (easy to use program) Such as 1 Click technology, secure payment system Selection (widest possible selection) Baby care products, office supplies, electronics 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 Qualitative Analysis Operates in seven retail websites US, Canada, UK, Germany, Japan, and France 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 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. Consolidated Financial Statement 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 Key Income Statements 2004 2003 2002 2001 2000 1999 Net$1,500.00 sales $6,921 $5,264 $3,933 $3,123 $2,762 $1,639.80 $610 Cost of $5,319 $1,000.00 sales $4,006 $2,941

$2,324 $2,105.20 $1,281.80 $145.9 $500.00$1,602 Gross Profit $1258 $992 $799 $656.8 $358 $2,000.00 1998 Gross$464.1 Profit $464.1 SGA expenses $0.00 SGA $910.38 $712.88 $703.452004 $673.7 Net Income

$195.6 1998 $778.76 1999 2000 2001$969.65 2002 2003 ($500.00) expenses Net $58 ($1,000.00) Income ($1,500.00) ($2,000.00) $35 $(149) $(567) $(1,411.27) $(720) $(124.5) Segmented Information Calendar Years Ended December 31, North America 2004 2003 2002 2001 $ 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 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 Net sales International (103) Net Sales Breakdown Calendar Years Ended December 31, North America Media Electronics and other general merchandise Other 2004 2003

2002 2001 $ 2,589 $ 2,270 $ 1,995 $ 1,811 1,128 879 681 578 130 110 85 72 3,847 3,259 2,761 2,461 2,513

1,780 1,104 645 225 66 15 2 2 1,172 662 International Media Electronics and other general merchandise Other 559 2 3,074 - 2,005 Key Balance Sheet Items 2004

2003 2002 2001 2000 Current Assets 2,539.40 1,820.81 1,615.68 1,207.92 1361.13 Fixed Assets 709.12 341.23 374.77 762.41 774.05 Total Assets 3,248.51 2,162.03

1,990.45 1,635.55 2,135.17 Current Liabilities 1,620.40 1,252.70 1,065.96 921.41 974.96 Convertible debt 3,669.69 3,838.94 3,948.61 3,717.19 n/a Long term debt 1,822.81 1,914.73 -1,716.07 -1,588.19

2,127.46 Other 8.44 21.23 44.76 27.13 n/a Total Liabilities 3,475.72 3,198.14 3,343.26 3,077.55 3,102.42 Shareholders equity -227.21 1,036.11 -1,352.81 1,440 -967.25

Cash Flow Analysis 2004 2003 2002 2001 2000 Cash flow from Operating 556.56 392.02 174.29 -119.78 -130.44 Cash flow from Investing -317.63 236.65 -121.68 -253.29 163.98

Cash flow from Financing -97.29 -331.99 106.89 106.88 696.15 Effect on Exchange in Cash 48.69 67.33 38.47 -15.96 37.56 Cash at beginning of year 1,102.27 n/a 540.28 822.44 133.31

Cash at end of year 1,302.60 n/a 738.25 540.28 822.44 Net change in cash 200.33 364.02 197.97 -282.15 689.13 Free Cash Flow 1997 1998 1999 2000 2001 2002

2003 2004 Q1 05 Q2 05 Q3 05 Operating Cash Flow 1 31 -91 -130 -120 -174 392 567 523 624 661 Less: Purchased of fixed assets 8

28 287 135 50 39 46 89 106 138 186 FCF -7 3 -378 -265 -170 135 346 477

417 486 475 One Year Performance Performance Trend Quarterly Segment Breakdown 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. Operating income is expected to be between $403 million and $478 million, or between (9%) decline and 8% growth, compared with 2004. Current Ratio Analysis Amazon Industry Price / Earning Ratio 36.04

51.7 Price / Book Value -190.27 9.6 Net profit margin 8.50 2.33 Return on Equity -2.59% 7.8% Total Debt / Equity -814.12 0.3 Dividend yield 0 5.2% Philip Fisher Approach Functional Factors

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

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

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