Unfortunately, the same people are saying there is no serious inflation in the world today, but Jeff knows that had his costs not jumped up, he could have met their bottom line numbers. As it is, in spite of Cara saying that Wal-Mart customers have no ‘tickee', Amazon's top line came in right on the mark. In fact, Amazon slightly beat estimates with 1Q05 revenues of $1.9 billion.

So, it's not an economy that ran into the wall because consumers have no money; they do. Maybe too much of it, for certain things.

The problem here is that costs are rising faster than some people want to believe, and that hurts margins, which in turn causes earnings to come up short of expectations. Amazon's margins are now significantly below Wal-Mart.

Interesting. Maybe that's why people are attacking the business model.

But, driving packages to your home, I suppose, is the same problem as passing the gas pumps on your way to the Big Box store, which are two different business models. So, is the problem with the business model, or with inflation?

AMZN dropped 2.45 pct during the day, and then about 5.23 pct after the close to sit at $31.00.

PE is now down to the average of the Specialty Retailer sub-industry, but price to cash flow is still about 30-32, which shows just how much investors think this company can grow. Even WMT trades at 13.5 times cash flow, and that is considered too high.

Long-term I think AMZN will work out, I believe, because it executes its plan well, but we all have to recognize that the salad days are over. Like most retailers, there is simply too much competition to grow its top line at an excessive rate. And it now has to face cost cycles that will periodically pull it down.

There are too many long-term holders who still think the company is in the high tech industry, but they are starting to get the message. That reality will take the stock further down. In the short-run, therefore, I believe AMZN will decline to possibly the 20-25-level.

When I compare AMZN to another Internet-based sales model like EBAY (overlaid in blue on the chart below, for comparative purposes), I see two companies that have been hurt by the same factors " delivery costs. In fact, if the AMZN took into effect the after-hours trading, it would look even closer to EBAY.

Unlike AMZN, EBAY does make my Cara Global Best Company 100 list, but it too has a stock that must drop to lower levels before I would buy it.