‘Amazon tax’ payoff starts to arrive in some U.S. states

PALO ALTO, Calif., Wed Feb 20, 2013 — Sales tax from Internet commerce, a prize pursued for years by U.S. state governments, is starting to arrive in California and a few other states, providing millions of dollars in new revenue, though not as much as a benchmark study once forecast.

After fighting hard to get e-tailers such as Amazon.com Inc. to start charging sales tax, and eventually passing a law requiring collection, the California Board of Equalization reported last week it took in $96.4 million in September-December 2012, its first full quarter of collections.

Coinciding with the holiday shopping season, that result put the state well on its way to meeting its forecast budget of $107 million in new e-taxes for the fiscal year that began July 1, 2012, as set by the California Department of Finance.

But that revenue falls far short of ambitious expectations set in 2009 by a University of Tennessee study that greatly influenced the online sales tax debate nationwide.

The study estimated that California, if it did not act to collect more online sales tax, would miss out on as much as $1.9 billion in 2012 revenue. Nationwide, it estimated, states would fail to collect $11.4 billion in 2012.

Amazon soars 15 percent as digital sales boost margins

SEATTLE, Fri Apr 27, 2012 – Amazon.com Inc.’s stellar quarterly results are helping convince skeptics on Wall Street that a bout of intense spending is beginning to pay off for an Internet retailer trying to transform itself into a technology company.

Shares in Amazon leapt 15 percent on Friday after it reported first-quarter earnings and margins well above investors’ most bullish expectations, tacking on some $10 billion in market value and marking its biggest single-day gain since October 2009.

CEO Jeff Bezos has tried to convince investors to stick with the company for the long term as it flirted with losses in recent quarters. He is trying to transform Amazon from an online version of a big-box retailer like Wal-Mart into a provider of technology services.

Some investors argue that its valuation of over 70 times forward earnings – dwarfing companies like Apple Inc. and Google Inc. that produce record profits – is justified because Amazon is on track for enormous margin expansion as it expands into more-profitable services from hosting websites in the cloud to providing an online marketplace connecting buyers and sellers.

“These services will become an increasingly important part of Amazon’s overall business and will be a driving force of profitability going forward,” Bernstein Research analyst Carlos Kirjner wrote.

Amazon is trying to be “not a bookseller or a retailer, but a company that uses technology and (now) its scale to transform whole value chains” from retail to publishing and video distribution.

LinkedIn IPO likely a success, but risks for investors are real

NEW YORK ― An initial public offering by social networking firm LinkedIn Corp. to raise about $341 million seems poised to be a stunning success, but it carries a number of risks that may shake up investors in the future.

The IPO is expected to price after the close of U.S. markets on Wednesday and start trading on Thursday.

In the fervor surrounding the rush to the first major U.S. social networking company to become public, investors may overlook some risks that could sour LinkedIn in the future, analysts say.

One of the biggest risks may be LinkedIn’s gutsy bet on its future growth ― combined with an admission that it does not expect to be profitable in 2011 on a U.S. generally accepted accounting principles basis.

“Frankly, they’re a little bit arrogant saying, ‘We’re going to have a great IPO, but we’re also going to lose money this year,’” said Francis Gaskins, IPOdesktop.com president.

LinkedIn raised the expected price range of its IPO by 30 percent on Tuesday. At the midpoint of the new range, the IPO would raise $341 million and give LinkedIn a market value of $4.1 billion.

No final decision has been made but the IPO is currently expected to price toward the upper end of the revised range, said a source who spoke on condition of anonymity.

After two years of losses, LinkedIn finally made money for its common stockholders in 2010 ― but then it was back to only breaking even in the first quarter of 2011.

A peculiar fact about LinkedIn is that on some level it’s not quite the Internet company most consider it to be.

The Big Four web companies basking in the glory of skyrocketing valuations and the expectation of blockbuster IPOs — Facebook, Twitter, Groupon and Zynga ― make most of their money through online advertising or Internet services.

LinkedIn is an online platform but actually makes more money through so-called “field sales,” or a salesforce directly soliciting customers, agencies and resellers.

In 2010, 56 percent of LinkedIn’s net revenue came from field sales. By way of comparison, only 44 percent of LinkedIn’s net revenue came from online sales.

“(Feet on the street) is an expensive sales force,” Gaskins said. He added that almost half of LinkedIn’s business comes from selling “hiring solutions,” which help match companies and job-seekers, a space where LinkedIn could face tough competition from niche job-seeking sites and traditional recruiting firms.