These two e-commerce giants have become household names and I thought they’d always have a place online for their brand identities: eBay is authoritatively known for auctions, and Amazon is the same for having the most selection of goods, prices, and happy customers. The following articles show how the founders cashed out, describe the current state of the two companies, and suggest that their future is not as secure as I thought.

Amazon CEO Jeff Bezos and about 7 other top company execs just sold $82,221,046 worth of Amazon (AMZN) stock — with all but $3 million of that going into Jeff’s banking account.

Curiously, the sales started May 1 and continued through May 4 — just days before Amazon announced its new large screen Kindle in New York.

Do we have a case of insider trading on our hands?

No way. No how.

Clusterstock’s John Carney tells us these kinds of sales are scheduled “way ahead of time, without inside knowledge.” John says it’s also unlikely Jeff or any other top Amazon execs would have been able schedule the Kindle news around a pre-planned sell date.

“They can get in trouble if they schedule events to coincide with sales,” says John. “Usually, they get around this by not even knowing exactly when the scheduled sales happens. It’s all done blind.”

Here’s a chart we put together show who sold how much.

SEC filings are boring and hard to understand but often give revealing tibits about the companies we cover. In SEC Stalker, we translate these filings back into English, revealing the plays and people behind the companies we know so well.

Link to original article:SEC STALKER: Bezos Dumped $80 Million Of Amazon Stock In Kindle Run-Up (AMZN)

Check out the list of folks above, other than Jeff, who also cashed in their shares. Tom Alberg, for example, sits on the board of directors with Jeff, and is the Managing Director at Seattle-based Madrona Venture Capital Group. They were amongst his very first investors, thanks to Tom’s instincts.Diego Piacentini is Senior Vice President, International Retail, at Amazon.Com, Incorporated, since he came on in 2000. The list goes on.

Now let’s take a look how the market compares eBay to Amazon.

“At this point, the Street basically calls eBay a value trap,” he said. “‘It’s cheap, but it’s cheap for a reason. Things aren’t going to be better; they’ll get worse.’”

EBay’s sagging price-to-earnings ratio, and the expensive price tag on Amazon shares are clear barometers of investors’ appetite for the two e-commerce giants inexorably linked in Wall Street’s mind.

While shares of eBay have risen 7.5 percent since January, Amazon shares, on a steady upward climb since November, are up 55.5 percent.

Shares of eBay are valued at 10 times projected 2009 earnings, compared with Amazon’s 54 times.

The online auction pioneer is touting impressive growth at its PayPal Web payments service and Skype Web telephone company — once-auxiliary units — while trying to assure Wall Street it can invigorate its stalled marketplaces business which has been hit by competition from Amazon and others.

“They admit to a lot of mistakes and they have a very ambitious plan to turn the company around over the next couple of years,” said Solaris Asset Management’s Tim Ghriskey.

But he cautioned: “The Street basically doesn’t believe they’re going to do it.”

EBay predicts 2011 revenue of $10 billion to $12 billion, compared with the $9 billion expected by analysts.

“Until (eBay) has positive momentum on their marketplaces business, it’s hard for the stock to react and the valuation keeps creeping down,” said Royal Capital Management’s Robert Medway.

As Morningstar analyst Larry Witt said: “People are saying, ‘It’s got some interesting segments, but at best we think it’s flat growth or 3 percent growth. That’s not a reason for us to buy it.’”

He added that the market appears to have priced in a “very severe decline” in eBay’s auction business.

Amazon has the opposite problem. Its dizzying valuation caused Barclays Capital analyst Douglas Anmuth to write that the online retailer was “priced more toward perfection.” He downgraded shares to “equal weight” from “overweight.”

The company, which analysts say has navigated a difficult spending environment well, was not always so well-loved.

As recently as last year, Wall Street was griping about Amazon’s decelerating margins and focus on sales instead of profits. But as the recession took hold and consumers began cutting back, investors went ga-ga at the company’s ability to lure buyers and post double-digit sales rises.

“Amazon went through years of pain,” Ghriskey said, as Wall Street knocked projects like discount shipping program Amazon Prime — now lauded as a traffic driver — and profit-crimping technologies now deemed smart, such as the e-book reader Kindle.

Still, some investors say eBay might eventually get its house in order — just don’t expect short-term results.

Value investors are still getting a deal on eBay, argued Medway, even if its marketplaces unit continues to struggle.

Returning cash to shareholders could be the key to mollify eBay investors in the short term. Investors have pushed for more capital, including a dividend, with some complaining that eBay sinks more money into acquisitions than share buybacks.

Also, a sale of Skype looks increasingly likely amid reports that the unit’s co-founders are eyeing a purchase.

“If eBay doesn’t fix marketplaces, it’s still worth more than $15,” said Medway, who owns the company’s stock, citing eBay’s dominance in auctions. “This isn’t General Motors where they have a lot of expenditures. This is an all cash-flow business. It’s worth something.”

Link to original article: ANALYSIS - “Value-trap” eBay vs “priced to perfection” Amazon

Since most investment analysts are concerned about the ability of Amazon to grow in the future, let’s take a peek at Amazon’s investment track record in startups that share a common goal with the e-commerce giant.

Venture capitalists are struggling to find positive returns in this tough economy. But it’s not just the VCs that are hurting.

Amazon.com today said that the value of its investments in private companies fell to $89 million in the first quarter, down from $247 million at the end of last September. That’s a whopping 64 percent decrease in six months. The online retailer has been one of the more active investors in new Internet startups in recent years, taking stakes in companies such as Yieldex, Wikia, Elastra and Engine Yard.

Earlier this month, Amazon invested in Seattle online recipe site Foodista and San Francisco startup BookTour.

But just like venture capitalists, Amazon is having a hard time figuring out what value to place on startup companies these days.

“The current global economic climate provides additional uncertainty,” the company wrote in today’s SEC filing. “Valuations of private companies are inherently more difficult due to the lack of readily available market data. As such, we believe that market sensitivities are not practicable.”

Amazon.com was burned badly during the last downturn because of its invesments in failed Internet companies like HomeGrocer.com, Kozmo.com and Living.com.

However, there’s a big difference this time around. Unlike the multi-million dollar bets at the turn of the last decade, Amazon is now putting far less capital to work in individual deals. For example, both Foodista and BookTour raised less than $600,000.

If the startup companies are unsuccessful, the giant online retailer should be able to stomach those types of losses. However, no matter how small the loss, investors may begin to question why Amazon.com continues to bankroll these money-losing ventures.

UPDATE: R. Scott Tilghman, an analyst at Hudson Square Research, notes in an email that some of the declines in Amazon.com’s private portfolio were tied to the sale of its stake in Bill Me Later to eBay. Since Amazon’s investment would have been cashed out, Tilghman said the portfolio valuation would have been reduced. The Venture Capital Dispatch blog also notes the possible effect of the Bill Me Later sale.

Link to original article: Amazon’s startup investment portfolio takes a big valuation hit

Investing to secure your future can lead to playing both sides of the game, as Amazon has done, which is not mentioned in the article above. Amazon, which helped fund the social networking startup, now owns Shelfari and a stake in its primary rival LibraryThing (Techmeme). These sites allow friends to compile and share reading lists and book shelves.

Shelfari & Library Thing:

Checkout what LibraryThing had to say about Amazon’s Shelfari:

As I’ve said before, I have respect for LibraryThing’s 40+ competitors, but withhold it for Shelfari. They were rather famously called out by me and by others in a series of blog posts exposing a program of spamming and of “astroturfing” (paid employees posing as excited users in blog comments). The apologized on both occasions, but I have, quite frankly, the greatest contempt for them, and for what book-based social networking will become if they beat out LibraryThing.

Picture a boot stomping on a human face forever. Well, okay, not that. But picture the book social network wars ending with a site created by music people who probably wouldn’t get that allusion, with advertising all over, with “community managers” “managing” conversation between book lovers, and under the shadow of what will sell books and not books’ other, greater values. In short, I believe there’s something “to” the idea of book-based social networking which they don’t get, and to which they are a danger. Yes, I’ve drunk my own Kool-Aid.

Any case, once the Amazon/Shelfari deal goes through, we are competing against Amazon.

Link to original article:Amazon acquires book community Shelfari

Amazon and eBay are fighting to stay relevant and current. As a large company, it’s difficult to adapt to a change, so the strategy becomes, “buy what looks like the future for cheap, now”. Look at what has happened to the music industry, who certainly thought they didn’t have to heed this advice, until the iPod came along, and mp3 file sharing became mainstream. Is it any wonder that Jeff and crew are selling shares as fast as they can right now, and cashing out while Amazon stock is over inflated from the dissmal economy compelling consumers to shop online for the cheapest alternative? Pierre (eBay) did long ago.

In today’s cutthroat, unstable, and fast evolving business climate, I think I’d do the same thing, something I never would have said several years ago about a similarly successful company I may one day build.

Well, I noticed the Golden Gate bridge here in San Francisco has had the safety nets removed, but you’ll still need to negotiate the 9 foot barbed chain-fence, added after the 2001 dot com bust.

WAIT, I’M JUST KIDDING, DON’T JUMP! Take that $50 and stick it somewhere safe, (not there, ew), because retro-modern and never-can-die-sequels-as-long-as-the-last-title-made-money are in this year! Take a look at hugely popular titles that will be reborn in 2009, and we’re dying to play.

Blizzard’s StarCraft2 - These guys have been sketchy, at best, about the game’s release date, but pre-orders are on sale and June 2009 seems to be the month, based on this MTV blog post.

Team 17’s Worms 2: Armageddon - will release around September 2009.

Duke Nukem Forever

Call of Duty: Modern Warfare 2

Guitar Hero 5 - This is not the actual image of the game - apparently nobody has any pre-release info, other than it will be named, “Van Halen”. From what we understand, the new release in the series will leverage an in-game advertising deal with Microsoft, and your own avatar that looks much like “Mii” characters from the Wii.

Diablo 3

Tekken 6

Wolfenstein

Doom 4

Jeremy Liew, a respected VC at Lightspeed Ventures, asked his blog readers what product categories would bring strong e-commerce sales in upcoming months/years. My comment never made it to his post, so I’ll share it with you here.

The economy sucks!

The low amount of available job opportunities is influencing millions of young minds to delay joining the workforce, and simply return to school.

In fall 2008, 18.3 million students attended the nation’s 2-year and 4-year colleges and universities, an increase of about 3.0 million since fall 2000. College enrollment is expected to continue increasing, reaching a projected 20.4 million in fall 2016. The expense for books and supplies rose from $801-$904 in 2005 to $850-$942 for 2006-2007.

(National Center For Education Statistics)

It sucks even more now to be poor and smart. You’ll need one of the few limited state scholarships, since school loans are getting even harder to come by, and the 6 month gap until repayment terms take effect won’t give students enough time to secure a decent paying position in this economy. There is simply no money available for loans, although many hope Obama’s promise to make them available comes true.

Students are struggling to pay for increasing costs of education, and paying more, with inflation already taken into account, than any graduating class has before. This is due to many influencing factors, most of which are problems that have been swept under the rug by the previous generation for the next generation to fix. Since most brick and mortar retail locations on campuses across the United States charge a 30% HIGHER margin than e-commerce retailers, many more students are willing to wait until their books are delivered from online merchant origins.

However, let’s put what I’ve just told you from an e-commerce retailer’s perspective. How do you think they are feeling?

They’re feeling awesome, at least those e-commerce companies that are well managed are feeling awesome. Amazon has been making a killing ever since the economy began it’s downward and seemingly never-ending spiral.

But books/textbooks shouldn’t surprise anyone as a category winner.

From 1998 up until 2007, (around the beginning of the mortgage financial crisis), McGraw Hill dividend growth stock has delivered an annual average total return of 10.80 % to its shareholders. The majority of the gains were erased in 2007 though, when the stock dropped from an all-time high of $72.50 in June 2007 to a low of $43.46 by December that same year, due to expensive one-time changes of stock options policies, but more closely related to the mortgage crisis they were heavily invested in and rapidly selling off of their mortgage based mutual funds at a loss.

However, the important thing to know for any risk-accepting investor is that in any other single year from 1998-2008, if you invested in McGraw Hill stock between April and June, before kids went back to school, and sold the stock anytime after book buying season ended, that’s up until the end of January in the following year, you would have earned at least 15-20% on your investment. On September 8, 2008, the stock closed at $45.86. It was an average of $40 per share from February through July earlier that year.

The book publishing and buying business is very strong, and for the most part, very predictable. McGraw Hill is as close to a sure bet as exists, and the only reason they suffered along with the rest of the economy is because, like everyone else, they were suckered into investing their huge reserves of cash into risky mortgage-based securities.

So they’re already recouping their losses.

The only worry for McGraw-Hill should be electronic books and textbooks, but they say that they are preparing for the industry coming game changer and welcoming new electronic reading devices. McGraw-Hill Education says they already publish 95% of their textbooks digitally, but as of current they are not as popular because a good reading device is not yet available. Reportedly textbooks are a 5.5 billion dollar market. With Amazon Kindle 2’s new student addition, students won’t really be able to share their textbooks with other students, supposedly, or sell them back at the end of the year. Many are interested to see how the electronic versions are priced as opposed to the paper versions for that reason.

Does this sound familiar to you?

It should, since this was iTunes claim to the music industry many years ago in order for them to be able to sell music for their iPod customers. What happened since then? Well, iTunes is now DRM free, right?

Amazon’s Kindle 2 - $359

Take a look at some of Kindle 2’s competitors, (also available on Amazon):

Sony eBook -$269

Hanvon N510 - $295

Cybook gen3 ebook reader - $350

BeBook 2 - $279

irex iliad ebook reader - (€499, not reasing in US)

Companies like Amazon, Sony, Adobe and Mobipocket are hastily trying to develop a universally acceptable format for eBooks. Unlike its competitor Sony, Amazon decided to allow support for other commercial formats used on their eBook reader device. This may turn out to be either their stroke of genius moment or their darkest hour. Amazon also sells AZW compatible eBooks through their online store. And since they are the webs largest book seller, they are already quite capable of figuring out how to effectively sell eBooks too.

But college students have proven to the world that they’re willing to circumvent the music and movie industry with Nabster and Torrents, and more recently, with YouTube, Hulu, Fancast, AOL and Sling. How long does it take to download the biggest PDF? 5 Minutes? Once the DRM is cracked, the file can be digitally distributed and redistributed. If file sharing, or student group buying and sharing one textbook saves them over $900, trust me, they’ll do it. Those on the fringe already are.

Senator Harry Reid lets poor college students know how he  feels about them.

Several senators have vowed that colleges who do not crack down on file sharing will not receive financial aid. Liberals and many college campus groups call this a blatant example of pork-barreling. They say that these senators have decided that poor Americans will be turned away from college if the coffers of ancient and outdated music giants are not filled at the expense of college students. Read the full story from c-net.

What do our BuyPlayWin readers think?

First, I have to give a shout-out to Dean Takahashi, writer at Venture Beat, who pointed me to Quake Live in his latest article today. Dean, IMHO, offers the latest and most comprehensive online game industry coverage, and I follow his and Andrew Chen’s posts religiously. Andrew is arguably the most fact knowledgeable entrepreneur, VC, and angel investor. Jeremy Lieu is another to follow for his good insight, although his entries span more than game topics if that is your only interest.

Now let’s get down to my experience playing on Quake Live. I have already tried the beta, and the live site is a huge improvement.

After you sign up, you’re put in a queue of other users waiting to play the game, mostly to balance server load. My position in the game playing queue was # 46,457, and 20 minutes later, it was only # 41,757. It’s safe to say that at this rate, I’d get to play sometime tomorrow morning. Unless of course current players realized that I am god’s gift to first person shooters, and made room by leaving. (Doubt it.)

Then something strange happened. Either I cut the line through some fluke, or more likely, the queue is a fictional tool used to deter players from trying to play when they’re already at capacity. They might be trying to impress someone with the high number of fake/realistic players, who’s not really into gaming enough to wait to play. Who knows, but I was sent to another web page to download and install their required browser plug-in, which must be updated from the beta version I already installed.

The installation took no time at all, and after logging back in, I tried to play a game. I was told that I had to first have my skill level assessed through a placement match. It’s basically training mode, where you jump through some hoops and go head-to-head in a deathmatch with a bot that adjusts her skill level to your performance. I think they do this by increasing her skill level each time you are up 1 or 2 kills, so you’re constantly going up and then returning to a draw score. While waiting for the game to begin, you can select one from a bunch of character styles.

Bored and out of my day’s allotment of “playtime” after reaching a draw of around 4 kills, I quit the placement match and tried joining a game, to no avail. I was greeted with the following message, “you must complete the 10 minute placement match.”

At first, this annoyed me. I mean, it’s not my first time playing. I’m the self-entitled god of Quake, or “the Harbinger of Death” as my fallen opponents gurgle at me from their death throes. Actually, my alias is “ragMF1″ in most shoot’em ups, if you ever want to find and play against me.

I’m not going to break down the Quake-playing basics. You’ve played before, and they’re all there. What I will tell you is that they’ve done an incredible job, well-documented everything, and are paving the way for the future of multiplayer gaming.

Last and precautionary, you should make sure you have the minimum system requirements well met, because game play is demanding on my laptop, and I can tell that my graphics card is heating up my machine, slowly and noticeably after 5 minutes of play.

What are the system requirements?

As the computer works harder to cope with it, there is not game lag from my internet connection, but game lag caused by holding down forward, shoot, and a host of other commands that just get backed up somewhere in my machine’s ether-world. Enough backup so that I lose control of my character’s movement and he keeps walking forward. Interestingly, the mouse aim and shoot function stays flawless, so although I’m doomed to walk toward a wall I can still aim and shoot accurately. My machine is a Dell Latitude D620 for your benchmark.

Well, enough from me, go play!

massive music quiz

massive trivia quiz

massive star quiz

massive boggle

DorkBots.com, San Francisco Bay Area flash game makers, have a new single player game title, Fishing Champion, and it’s a lot of fun. The introduction and game controls are especially well done, and their attention to small details is evident with sounds, graphics, and point scoring for different fish sizes. I could suggest a few other features, but it is a fun game.

This will be our last post before the new year. It’s that time of the year when worker productivity hits it’s lowest point, (except for March Madness). Bosses are usually gone by this week to some ski vacation in their 15th home in Aspen and they’ll find something to complain to you about their trip after they return (I hear family time can do that to ya).

However, worker mice have piled up important looking papers on their desks and opened smokescreen docs on their computers in their best attempts to imitate hard work, while secretly they are browsing the web to learn how to brew their own eggnog, upping their game-playing or book-reading breaks to 60% of their day from 20%, tripling bathroom break frequency and length and stopping at every desk to chat along the way, desperately applying for other jobs, drinking at least two at every lunch and sometimes not coming back, quintupling their snacky and sweety intake, and our personal fav, embarrassing yourself at company office parties (”I never knew he/she rolled like that”).

From all of us at BuyPlayWin, long live the holiday season. We’d all probably kill each other without one!

Occipital

Occipital found this pizza company, Red Baron, and the promotion printed on their boxes in grocery stores across America, and sent us a photo as evidence of our website name’s closely matching text. How thoughtful of them…

Red Baron

Amazingly, we received another email from a game developer who wanted to learn more about us, and came accross this same promotion. I am sure that these encounters will not be the last. I have his permission to quote a small part of his email:

“Does BPW (BuyPlayWin) develop food promotional materials, like the ‘EatPlayWin’ promotion on RedBaron Pizza boxes? Thanks.”

As funny as this was to our whole team, let it be known that BuyPlayWin is in no way affiliated with Red Baron pizza, their parent company, Schwan’s Consumer Brands North America, Inc, or the EatPlayWin promotion. BuyPlayWin is a startup company developing e-commerce and game technologies, part of a new and sensational service that is soon to be offered to consumers everywhere.

We must admit, Red Barron brand pizza does have good taste in their promotional slogans.

***for non-gamers, the title of this post references a leetspeak slang term, “PWNED”, which is not a typo and is derived from the word “own”. Pwn implies domination or humiliation of a rival, used primarily in the Internet gaming culture to taunt an opponent who has just been soundly defeated (e.g. “You just got pwned!”). One other meaning can be ‘perfect ownage’. To do this, you could be playing a fighting game, where your character defeats an opponent without receiving any damage (i.e. leaving him/her unscathed).***

It’s always interesting to see which folks that write about video game and social network industry news actually play the games they write about. We’ve yet to hear much about the Agarwalla brothers re-release of Scrabulous under the new website and brand, lexulous.

Had you been a real fan of the Scrabulous game that captured Hasbro’s dim-witted attention and legal wrath on Facebook, you would be a registered user, and received an email like the one I got:

You can continue playing your favorite word game online at http://www.LEXULOUS.com.

Your old username “________” will work and your ratings have been preserved. In case you have forgotten your password, please visit - http://www.lexulous.com/forgot_password.php

For any help, please feel free to reply to this email and we shall get back to you within a few hours.

Best Regards,
Rajat & Jayant (The Lexulous Team)

P.S. All the old rooms like “The Lounge” and “Bingo Boomers” are now open.

They’ve put a lot of quality effort into their new release and have several versions available to play, and to license for your own private website. Check them out!

I observed extreme variance in taste and preference with gaming and shopping from country to country, and it is evident in the way the product is catered to the intended audience.

Checkout GamezIndia:

If you’re an American, you probably don’t know what a DESI is, but all Indians know this term and use it popularly to refer to themselves. Hence the site’s motto: “the desi playground”.

Desi (or Deshi; pronounced [ˈd̪eːsi] or [ˈd̪eːʃi], Hindi: देसी, Urdu: دیسی, Punjabi: ਦੇਸੀ, دیسی) is a word originally from Sanskrit literally meaning “from the country” or “of the country”.

Desi is commonly used in conjunction with ABCD, a term for Indians that have relocated abroad, and are neither here nor there.

American-Born Confused Desi, or ABCD for short is a term used to refer to Indian, Pakistani and Bangladeshi Americans born in the United States, in contrast to those who were born overseas and later settled there.

These cultural nuances are vital to a business that operates within a nation’s borders, and I’ve gone to great lengths to learn some of them. In the example above, the term “Desi” allows residents of India to truly identify with the website, and builds loyalty. Thinking of expanding internationally? I suggest you do the same for any targeted region.

Have a similar unique characterisitc you’ve observed in another culture? Comment and share with us!

Well, I’d say the Virtual Goods Summit 2008 was a huge success. There were tons of smart people representing a host of game companies, and of course, I was over-dressed.

Being such a “noob” industry, there are many issues that need to be dealt with concerning the sale of virtual goods. The major issues that I caught, included:

• Fraud & Security
• Cashouts & Increased Risk
• Elitist Games & Stickiness
• Statistics Tracking & Product Development
• Time Vs Money & Valuating Currency
• Primary & Secondary Markets

I really enjoyed the Session A: “Metrics for Virtual Goods Businesses: The Whirled Case Study” presentation by Andrew Chen & Daniel James. They had their $hit together, and presented some very interesting statistics they track. I learned that children that played “Puzzle Pirates” made an average of $0.20-$0.25 cents per hour. That’s $40.00 per month. Funny how it seems just low enough to disinterest the formation of sweatshops abroad, who may work to create virtual currencies if the time value of money is high enough for that game.

Some of those smart people were panelists, and some of them sure did bring their egos to the conference. It was kind of funny at one point, because I don’t think the panel moderator had much idea of what they should be talking about, so panelists started asking the audience, “what do you people want to know?”

Actually, it sounded like everyone faced the exact same issues.

One fascinating part of the conference for me was talking to an attending PayPal representative, Renata. You see, PayPal charges a minimum of $1.00 for micro transactions, and were losing big in this market and many others to newly founded micro transaction leaders rushing to fill the market gap. Imagine getting charged $1.00 to send $1.00 to a friend. That’s pretty bad pricing analysis, and I expect to see a big change come form them soon.

I won a guitar hero game and plastic guitar for the Wii on my way out of the conference. God, I love the conference organizers! Special thanks to Charles Hudson, VP of Business Development for Serious Business.

I took the gift to Best Buy yesterday, with gift receipt, and exchanged it for Mario Kart and wheels.

I have to say that I’m not so impressed. I mean, its like the same old game with worse controls.

Anyhow, I digress. If I talked to you and never got back to you, shoot me an email!