Is Amazon stock a bubble?

When the dot.com bubbles burst in March 2000, it did feel as if Amazon got a get-out-of-jail-free card. Why is this company such a darling? How does it make money by giving aways its profits in massive discounts? Is the Kindle on its way to becoming the world’s most famous shelf-ware? How long can it go on defying gravity? And, the answer to that question seems, “Forever.”

It appears as if no one was willing to say, “The Emperor has no clothes.” Andy M Zaky, a contributor to Fortune, writes: ‘The online retailer's shares are valued at more than three times Apple's and more than two times Google's. And there's no reason why.’

He continues: ‘Whenever a stock can potentially drop 50% and still be considered overvalued, that's when you know the stock is a bubble. Amazon (AMZN) far surpassed bubble territory ages ago but investors still continue to plunge billions of dollars into the company. If the stock were to crash to $80 a share today from $164, it would still be trading at a significantly richer valuation than Google (GOOG), Apple (AAPL) or even Research in Motion (RIMM).”

Zaky doesn’t think it makes any sense, considering that both Amazon’s top (growth) and bottom line (profits) have underperformed compared to Apple, Google and RIM. ‘A company can always reduce costs and improve margins to move more of its revenue to the bottom line, but the hard part is actually producing, marketing and selling a product that people want to buy,’ he says. In other words, business is still about business.

‘When RIM was trading at $150 a share, sophisticated investors knew the stock was a bubble. This case is no different. There is no matter of 'if' in this analysis. It's a matter of 'when.' Amazon will lose 50% of its value over the coming years. At $150-$160 a share, investors are flirting with financial suicide,’ he concludes.

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Fortune

Bouqinistes of Seine-side sell cheap tourist trinkets

We all know how the French protect their independent booksellers and treat them like vintage wine. In Paris, Seine-side booksellers, known as bouqinistes, have existed in the city for 300 years and are a tourist attraction for book lovers from all over the world. They are famous for selling everything, from ancient editions of books to secondhand contemporary novels, engravings and prints, magazines, collector’s stamps and antique postcards. The city hall gives them their lots for free and they are exempted from paying taxes, in return for which they have to follow certain rules: they must sell books in three out of the four boxes in their area. The city hall says they have a duty to preserve a cultural heritage.

So, imagine the horror of the authorities when they discovered these shops selling cheap tourist souvenirs (surreptitiously) to augment their income. The problem is that they are located in tourist areas and most of the tourists don’t read French, and plastic Eiffel Towers sell better than used books.

Twenty odd booksellers waged war with established bookseller, in 1620 to be allowed to sell their books under the bridge. It was during the French Revolution that these became a permanent feature. Napoleon 1 allowed these bouqinistes to spread out from Quai Voltaire to the Pont Saint-Michel, but they were not to sell anything “immoral.” Napoleon III allowed them to install boxes filled with books on the parapets of the quays on the Left Bank, and city hall handed out permits each year.

Today, there are 216 bouquinistes along the Seine selling 400,000 books, and the city hall warned 40 of them to stop selling tourist trinkets. The city currently has 100 applications for 22 lots remaining; obviously there is still a demand for selling books by the Seine -- with or without plastic Eiffel Towers.

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Publishing Perspectives

Do you really own the ebook you just bought?

A Wired.com report says that a recent appeals court decision in the US suggests that “software makers can use shrink-wrap and click-wrap licenses to forbid the transfer or resale of their wares.” What that implies is that just because you bought it, it does not mean you own it.

How does this apply on a book? When you buy a physical book (that is, the dead tree variety), you own it, right? You can resell it as a second-hand copy, or a collector’s item (if it is rare or a first edition), put it in a library where people can borrow it, or even sell it at ‘remaindered’ bookshop. For one thing, a certain amount of physical deterioration is taken for granted, and collectors are known to spend an enormous amount of money to acquire rare books.

But in the case of ebooks, who owns it? Can one resell it? College students who can ill afford the price of new text books thrive on the used book trade. Often it does not matter if it is not the current edition. Will they be allowed to borrow them from libraries?

Says Greg Beck, the defense attorney in the case who represented an eBay seller sued by Autodesk, “The other ramification, there is no reason a similar license could not be put into the cover of a book. It wouldn’t be difficult for everybody to implement this.”

Not surprisingly, the American Library Association argued against it saying, “It feared that the software industry’s licensing practices could be adopted by other copyright owners, including book publishers, record labels and movie studios.”
Scary, isn’t it?

Wired.com

The most unwanted authors

A report in the Telegraph says that “givers donated more Dan Brown books to Oxfam than any other author”. Copies of The Da Vinci Code and Angels & Demons topped the list of unwanted books that were given away to the charity. (Of course, it is entirely possible that sometimes people do give away their favourite books as well.)

(The story is also interesting in that it has links to several websites with heading like: Dan Brown: 50 factual errors, Dan Brown’s 20 worst sentences, and others.)

The top ten are:

1.Dan Brown
2.Ian Rankin
3.Patricia Cornwell
4.Alexander McCall Smith
5.John Grisham
6.Danielle Steel
7.JK Rowling
8.Jeremy Clarkson
9.Maeve Binchy
10.Bill Bryson (New

The report says that, “The survey gathers information from the charity's network of 686 shops ... Oxfam is Europe's biggest high street retailer of second-hand books and the third-biggest bookseller in the UK ... The charity sells £1.6 million of books a month, enough to pay for 64,000 goats or 800,000 bags of seeds, or provide safe water for 1.7 million people.”

There is no mention if Oxfam will be accepting ebook donations.

The Telegraph

Opening an indie bookshop

Ever since Silverfish opened its doors, I have had dozens of people walk in and say how they too have always wished they could open a bookshop and goyang kaki. (One customer even said we had stolen her name -- to which another said that “Termite Books” was still availalble.) Some ask for advice, and I give them the best advice I got from Thor of Skoob Books: don’t expect to make much money.

But if there are some of you who are still thinking of opening a bookshop, you could do worse than read this story by Robert Gray in Shelf-awareness of his interview with: ‘Donna Paz Kaufman and Mark Kaufman--of Paz & Associates: The Bookstore Training & Consulting Group--who facilitate a workshop retreat, Opening a Bookstore: The Business Essentials, and partner with the American Booksellers Association to provide training for people interested in entering retail bookselling.’

Gray quotes the Kaufman: "Our goal ... is to reach prospective store owners early in the decision-making process, so that they're on the right track from the moment they open their doors rather than having to dig themselves out of a hole."

“"Before the advent of the 'information age,' we suspect that many booksellers opened stores with a Field of Dreams attitude--if you build it, they will come. With a great deal at stake, our trainees realize how much they don't know; they see the number of indie bookstores that have gone out of business and want to know why ...”

Shelf-awareness