When I wrote a cover story on Amazon.com in summer of 2000, Can Amazon Make It?, I was uncomfortable with the implication of the cover language that there was a good chance Amazon wouldn’t make it. Although Amazon clearly faced big challenges at the time, I didn’t think the implication that it could go out of business was warranted at the time based on what I knew about the company’s business model. And truth be told, I had some pitched conversations with some editors about that.
But there was reason for concern. Ravi Suria, a Lehman Brothers debt analyst (and how’d you like to have that title on your resume today?), got a lot of press insisting that Amazon faced imminent oblivion thanks to some $2 billion in debt. (Another question: Doesn’t $2 billion in debt sound quaintly trifling today?) He wrote in his report: “The company’s inability to make hard cash per unit sold is clearly manifested in its weak balance sheet, poor working-capital management, and massive negative operating cash flow—the financial characteristics that have driven innumerable retailers to disaster throughout history.”
Fast-forward to today, and things are a little different. In a little-noticed announcement, Amazon said it’s redeeming the last of that debt. This despite a terrible economy, especially for retail.
I have to think that founder and CEO Jeff Bezos must be letting loose one of his thunderous laughs today. After which, as is also his style, he will get back to business.