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Amazon's Ambitious Bets Pile Up, and Its Losses Swell 168

Posted by Soulskill
from the i-will-gladly-pay-you-tuesday-for-a-hamburger-with-2-day-shipping dept.
New submitter shirleymarone sends word that investors are becoming impatient with Amazon's willingness to absorb short-term losses for theoretical long-term gains. The company brought in over $19 billion in revenue last quarter, but reported a net loss of $126 million. The company warned of even greater losses this quarter. Amazon officials exude a serene if vague confidence. "We're not trying to optimize for short-term profits," Thomas J. Szkutak, the chief financial officer, said in a conference call. "We're investing on behalf of customers and share owners," he said. "We're fortunate to have these opportunities." But even the analysts, who are generally enthusiastic about the company and its global ambitions, are asking slightly more pointed questions these days. For all these investments, one analyst asked Mr. Szkutak, why are sales not increasing even faster? His answer: Just wait. ... Amazon, which is based in Seattle, long ago transcended its roots as a simple retailer. In recent weeks it introduced Zocalo, a document storage and sharing service that grew out of its fast-growing web services division. It began a program to allow readers to consume as many e-books as they want for a set monthly fee. And it is starting to ship its long-awaited entry in the smartphone sweepstakes. The phone, the result of years of development by thousands of Amazon programmers and designers, is meeting some resistance from reviewers.
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Amazon's Ambitious Bets Pile Up, and Its Losses Swell

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  • surpising (Score:5, Interesting)

    by LduN (3754243) on Friday July 25, 2014 @09:32AM (#47530533)
    Wow look at that... a company that (at least a little bit) cares about the customers at the end, not penny-pinching to make investors happy (for now).
    • Re:surpising (Score:4, Insightful)

      by Anonymous Coward on Friday July 25, 2014 @09:44AM (#47530645)

      Wow look at that... a company that (at least a little bit) cares about the customers at the end, not penny-pinching to make greedy short-term investors happy (for now).

      FTFY

      Many of us investors do prefer to hold stock in companies that look like they're going to be around for a long, long time.

      • Re: surpising (Score:5, Insightful)

        by Karlt1 (231423) on Friday July 25, 2014 @11:00AM (#47531343)

        Amazon went public in 1997. How long do long term investors have to wait for consistent profitability?

        • Re: surpising (Score:5, Interesting)

          by Frobnicator (565869) on Friday July 25, 2014 @12:00PM (#47531905) Journal

          How long do long term investors have to wait for consistent profitability?

          Math time... $126M loss / $19B revenue = 0.66%, less than one percent loss for a quarter. The company is worth about $140B, so the quarter's drop is less than a tenth of a percent, meaning absorbing a the loss is a tiny decrease in a large bucket. In contrast, the skittish investors yesterday cost the company about $12B compared to the $126M business loss. The skittish investors who cause huge overnight drops like this create opportunities.

          We're not talking about a company that is hemorrhaging money. It isn't a company plagued by mismanagement. It is a company that since their first day built a track record of tinkering with models. That is all Amazon has ever done. They have the resources to continue operating when they discover unprofitable ones. It takes money to make money, and many tests and changes cost time and money. Yes, some investors refuse to see the long term and demand a profit every single quarter. Other investors see this as an opportunity to buy or to hold.

          Last night they took a 10% drop because short-term investors are skittish. Today you can buy it at a 10% discount; so thanks skittish investors!

          • by Hussman32 (751772)
            Down four, buy more!
          • by Kelbear (870538)

            Well here's a counterpoint view:
            http://seekingalpha.com/articl... [seekingalpha.com]

            It has a lot of charts and modeling that I don't understand, but at a high-level view, this analyst pins the lack of profitability to Amazon's revenues growing in less profitable business ventures while growing relatively slower in the more profitable business lines. In 2002, 78.8% of revenues were from Media, 19% EGM, and 2.2% Other. In 2014, it's 29.6% Media, 64.8% EGM, and 5.5% Other. Media has much bigger profit margins than EGM(electronic

            • I actually appreciate Amazon's approach.. imho a business should either expand/invest or return dividends... I don't like companies that simply bank significant profits or hold onto under-utilized assets for years. Amazon uses its assets. Also, the share price has grown to reflect this overall growth in value, while not specifically paying out dividends... Good for them, this is a very small blip, and you're right, I don't think their phone is the answer.. maybe at a sub $400 out of contract price (in lin
          • In contrast, the skittish investors yesterday cost the company about $12B compared to the $126M business loss. The skittish investors who cause huge overnight drops like this create opportunities.

            Skittish investors didn't cost the company a penny. You will not find the stock price in any profit or loss statement for the company. The day to day fluctuations of the stock market have only a very indirect effect on Amazon's finances. The main thing it matters for is if Amazon were to issue additional stock to the market in the future, they wouldn't raise as much money. It also has a mild effect on their cost of capital.

            What this means is that skittish investors cost all Amazon investors $12B in valu

    • Re:surpising (Score:5, Insightful)

      by wisnoskij (1206448) on Friday July 25, 2014 @09:44AM (#47530651) Homepage
      Umm... Well, to be clear. They are spending money to develop an iron grip on the industry in the long run. They are willing to lose money, not to be fair to customers, but to develope possibly the strongest monopoly that every has existed, and if left up to Amazon ever will exist.
      • Re:surpising (Score:5, Insightful)

        by Raven42rac (448205) on Friday July 25, 2014 @10:02AM (#47530839)
        They've been doing this for close to 20 years, you think that would be plenty of time to actually make money.
        • Re:surpising (Score:4, Insightful)

          by Charliemopps (1157495) on Friday July 25, 2014 @10:20AM (#47530991)

          They've been doing this for close to 20 years, you think that would be plenty of time to actually make money.

          This is the internet... Hype = Profit

          • Re:surpising (Score:5, Interesting)

            by MozeeToby (1163751) on Friday July 25, 2014 @11:01AM (#47531361)

            That's nice. Now for a thought. Let's imagine Amazon runs a script and raises all their prices, every single one of them, by 1% Would anyone notice? Would anyone care? Is 1% even enough to justify looking elsewhere for a product? They'd still be cheapest on 90% of things, why would anyone bother?

            Guess what, they just boosted their profits by $700,000,000. Ok, lets say some people do shop elsewhere, so call it $600,000,000. Not just their revenues, their actual profits. And investors are running away

            • by Alomex (148003)

              Let's imagine Amazon runs a script and raises all their prices, every single one of them, by 1% Would anyone notice? Would anyone care?

              Yes, as every one with retailing experience can tell you it's a cutthroat business with profit margins in the 1-3% range, so a 1% change is huge.

            • Let's imagine Amazon runs a script and raises all their prices, every single one of them, by 1% Would anyone notice?

              Short answer? Yes they would.

              Long answer? 1% is not a trivial price increase when what you are selling is commodities at cutthroat retail prices. Walmart's entire profit margin is just a hair over 3% and nobody thinks they are a failure. Their cost advantage over competitors like Target is whisper thin. Less than 1%. If they raise prices by just 1% they would no longer be the cost leader anymore.

              Is 1% even enough to justify looking elsewhere for a product?

              On individual items? Mostly not. But over a large enough basket of items and customers? Absolutely yes.

          • by mcrbids (148650)

            On the Internet... Hype = Sucker Investors.

            There, FTFY.

        • Re:surpising (Score:4, Insightful)

          by msauve (701917) on Friday July 25, 2014 @10:32AM (#47531095)
          They are making money, just not by selling goods and services - if you bought AMZN back in 1998, you'd have a greater than 6400% profit now.
          • by Junta (36770)

            The investors might have made profit but the company itself is operating in the red. This just means the perceived value is higher than it was in 1998. Which makes sense, we are talking about a company that had 19 billion dollars flow through it in a quarter, which suggests a high likelihood they could be profitable at least for some time if they chose to.

            Basically amazon has been saying they are investing and in the very long term the bets will pay off. AS it stands, amazon has not opted to proceed to '

            • Amazon has been booking profits since 2002.

              The issue is that Amazon's return on investments has been low, lower than the S&P 500 as a whole. They have been pursing market share instead of short term profits. They have been investing in new risky business areas. Stockholders currently share Bezos's bullish predictions that short term sacrifice is worth the risky long game. It has worked for Berkshire Hathaway but not so well for Sony. At some point it is going to need to become a more normal company.

          • by praxis (19962)

            If you bought AMZN back in 1998, you'd have a greater than 6400% profit now.

            Only if you sold the stock now.

        • by Salgat (1098063)
          You don't need a profit to benefit your investors. As long as your company grows in value, all those who own a share in the company see their own value also increase. Amazon is likely only around because of their long term strategy, which has afforded them the ability to remain relevant through fast shipping, large selection, and their media presence.
        • by 0123456 (636235)

          They've been doing this for close to 20 years, you think that would be plenty of time to actually make money.

          Dude, making money is just so 19th century.

      • by Sockatume (732728)

        I'm not sure that's true any more. One of the biggest businesses they were trying to compete, entertainment media, with has gone digital and despite their best efforts they're only remotely competitive in the books area. If their goal was to kill off retail stores and then dominate physical media delivery, it looks like they missed the boat by five years.

      • by TheLink (130905)

        If it was Japan, China etc doing the same thing they'd be charged with "dumping": https://en.wikipedia.org/wiki/... [wikipedia.org]

        • by afidel (530433)

          They're not selling goods below cost for the most part, it's just that their expenses eclipse their earnings from sales. This is largely due to capital investments in projects and shipping centers.

      • Re:surpising (Score:5, Insightful)

        by afidel (530433) on Friday July 25, 2014 @10:56AM (#47531303)

        Lol, they're less than 1.7% of the retail market, a quarter the size of Walmart and only twice the size of the flailing Sears. Heck, as a percentage of the market they're significantly smaller than the old Sears catalog business used to be.

      • by trepanne (2648397)
        Yes, this.

        AMZN's game plan is to transform retail by exploiting network effects, economies of scale, lower cost structure, and the ability to shunt costs off to others. They're investing heavily to create a dominating position that will be unassailable by new etrants - see Warren Buffett's comments about economic moats.

        They are deliberately running their operations close to break-even from an accrual accounting point of view... their $126M loss sounds large, but it's not very material given their $20
      • How are they going to make the strongest monopoly ever? More stores than ever before are online now. I can literally order everything I need and have it shipped to me, and never touch amazon. Lowes, Giant Foods, clothing stores, Ali Baba, Ebay, all have online stores.

        The barrier to entry is so absurdly low that I dont think anyone needs to worry about Amazon's monopoly, at least in the shopping sector.

        And the barrier to entry for cloud services is pretty low too-- all you need is space at a datacenter (w

    • Re:surpising (Score:5, Insightful)

      by Anonymous Coward on Friday July 25, 2014 @09:48AM (#47530693)

      Amazon will only seem to care about customers until they drive out all competitors. Then they will act like any other monopoly does.

    • surpising (Score:5, Interesting)

      by slashdice (3722985) on Friday July 25, 2014 @09:56AM (#47530773)
      And the farmer cares about his pigs so he doesn't butcher them until they get nice and fat.
    • Re:surpising (Score:5, Interesting)

      by segedunum (883035) on Friday July 25, 2014 @10:12AM (#47530925)
      They don't care about customers. Not making a profit is a ruse that many companies pull to avoid tax and be creative with accounting.
      • by bigpat (158134)

        They don't care about customers. Not making a profit is a ruse that many companies pull to avoid tax and be creative with accounting.

        Bingo! I was looking to see if anyone else made this comment. As long as Amazon isn't just adding fat to the organization, but is actually reinvesting in growth which will otherwise be profitable, then not making a taxable profit is the best thing an American company could do with its money. Especially if they expect corporate tax relief in the future.

    • by Ziggitz (2637281)
      Amazon is a company that realized if they just stuck with what they had ten years ago they wouldn't still exist today and they're not so stupid to think that doesn't hold true today.
    • by Columcille (88542)
      Setting prices to undercut - and diminish - competitors isn't quite the same as caring about customers.
    • Just goes to show that most investors are lemmings.
    • How is making yet another mobile phone based on Android any good for consumers? Given that smartphones peaked and there's not really any innovation left so the only logical reason for doing it is to lock consumers into Amazon's ecosystem which isn't a consumer friendly action.
  • by FearTheDonut (2665569) on Friday July 25, 2014 @09:42AM (#47530633)
    As a software engineer who is often asked to consider "the cloud," at what point should things like poor company performance impact software design decisions? It's easy to say not to use the cloud, but the cost savings for some make it irresistible. I suppose at some point AWS might go away due to a CEO change, corporate shift, etc., but I have a feeling that, with all of the consumer services using AWS, it will be considered "too big to fail," and be required to stay up (and, therefore, I won't have any reason to consider AMZN's performance as a software design concern.


    Anyone have thoughts on this?
    • by FearTheDonut (2665569) on Friday July 25, 2014 @09:43AM (#47530643)
      Besides poor punctuation, missing end parenthesis, and way too many commas.
    • by netsavior (627338)
      In my opinion AWS is the most mature and the most flexible of the "big enough to matter" cloud providers. I don't foresee them stopping this service any time soon, but if they did, the chances that some other provider would provide a "turnkey" migration from AWZ to their service are very very good.

      Not much will need to be changed if you use some other provider...

      Just wrap the hell out of your S3 specific code for when thee next trend in "CEO Beat" magazine is "Self Hosting - How to cut your cloud bud
      • Re: (Score:2, Troll)

        by Guspaz (556486)

        You don't move to AWS if you care that much about budget; among cloud providers, they have some of the highest costs, and lowest performance. They're also one of the most flexible (in terms of what you can do), but there are a lot of mature cloud providers out there that will give you the same performance for a fraction the cost. Just not necessarily the breadth of services.

    • by swb (14022)

      One question might be "What business is Amazon in?"

      They almost feel like one of those somewhat out of fashion companies that owns a whole bunch of businesses that are only tangentially related. Are they a consumer electronics company? A hard goods company? A clothing company (Zappos, and Amazon's fashion wing)? A bookseller? An internet services company?

      With regard to the last one, maybe AWS isn't a long-term business but a medium-term strategy to sell their own excess capacity to cover the cost of hav

      • by Guspaz (556486)

        AWS is estimated to represent about $3 billion in revenue to Amazon, it's been a very long time since it had anything to do with Amazon's excess capacity.

      • by afidel (530433)

        AWS started as a way to gain revenue from the spare capacity they had for cyber monday, but it's now ~200x the size of Amazon's actual needs and is its own revenue and profit center. If a new CEO wanted to at this point he could spin it off into a separate company with contracts to host services for Amazon. I'm honestly not sure what it would gain you other than access to a pile of capital to use elsewhere, but for the time being Amazon doesn't seem to be hurting for access to capital.

    • by mlts (1038732) on Friday July 25, 2014 @11:31AM (#47531651)

      I think AWS is the primary brand for cloud services, with Azure right on its heels, then other providers (Rackspace, etc.)

      Amazon has some unique services that nobody else has. Glacier comes to mind for long term storage [1]. There are other services they provide which can be useful.

      Amazon is not going anywhere... the shareholders may be unhappy right now... but it isn't like Amazon's market is drying up anytime soon. They are the only big company which can fight Wal-Mart and win on price alone. [2] If Amazon so chose, they could actually wage a battle on every front Apple is making money on, and actually make headway. Very few companies can do this.

      Even if Amazon "failed", the cloud part would be spun off to a different entity. If not, because of all the critical data on AWS... Amazon almost certainly would receive a bailout, just like the car makers did.

      [1]: Glacier is not going to replace a normal offsite volume anytime soon. The cost for uploading and storing is very reasonable. However, you do pay for accessing the data. If you use this for backups (I use it as the media of absolute last resort), it can be a useful tool.

      [2]: This isn't a good thing with the race to the bottom, but a notable point.

  • "We lose money on every sale, but we make it up in volume" has never been as true as with Amazon.

    (No, it's not literally true - but investors seem pleased to accept below-market returns (if not indeed losses) forever... If only the rest of American businesses had owners willing to give all their money to their customers.)

  • I've bought over 1300 eBooks from their Kindle library. At $3 to $4 each... well, a Slashdot reader can certainly do the math.
    • Why?
      • by CrankyFool (680025) on Friday July 25, 2014 @09:58AM (#47530795)

        Probably because, we expect, that Slashdot readers are generally comfortable enough with elementary math to be able to either multiply $1300 by 3 ($3900) or 4 ($5200), or has easy access to a calculator.

      • by dohnut (189348)

        “I was in Nashville, Tennessee last year. After the show I went to a Waffle House. I'm not proud of it, I was hungry. And I'm alone, I'm eating and I'm reading a book, right? Waitress walks over to me: 'Hey, whatcha readin' for?' Isn't that the weirdest fuckin' question you've ever heard? Not what am I reading, but what am I reading FOR? Well, goddamnit, ya stumped me! Why do I read? Well . . . hmmm...I dunno...I guess I read for a lot of reasons and the main one is so I don't end up being a fuckin' w

      • by WilyCoder (736280)

        ...because the OP likes to read?

    • I second that. I'm at 300+ books (although I have a tendency to buy professional reference materials that are $50+)

      Kindle is awesome. Easy access to English language books (I live abroad, try finding the latest anything in Vietnam), it's searchable (great for reference books), and I own two kindles so I can keep an entire kindle of reference books in my desk without a huge footprint.

      • I do read a lot, mostly for entertainment. I'm averaging about three novels a week. I love that I can pack a dozen books for a trip without worrying about overweight luggage charges. At the price I'm paying per book, I'm now reading in more genres and reading more authors in the genre I always read a lot of. My model of Kindle doubles as an MP3 player, so I can have my tunes along as in-flight entertainment, too.
  • .7% (Score:5, Insightful)

    by wisnoskij (1206448) on Friday July 25, 2014 @09:49AM (#47530705) Homepage
    That is not a loss, that is breaking even.

    Yes, between the profits that they could be making, and them breaking even, they are "losing" money in some senses. But in terms of real world "losses" , they are not swelling or piling up, they are just spending their money as fast as it is coming in; And at the end of the year breaking even (within a percentage of a 1 percent).
    • by west (39918)

      Given the opportunity cost of the money an investor spent on buying Amazon stock, it's pretty much effectively a loss.

      Heaven help Amazon if its investors ever start demanding actual market returns. Luckily, it may never happen. By now, every investor has got to realize that Amazon's profits will never justify their stock price. Yell that the profits aren't high enough, and all you're doing is yelling that "the Emperor has no clothes", when you're invested in the Emperor.

      Far better to praise Amazon's move

      • by msauve (701917)
        AMZN in 1997 was $4. It's over $300 now. How is that "effectively a loss?" If you want to pick specific dates to make your point, I can do the same for some other company which makes real profits, and show a loss for investors.
        • by tomhath (637240)
          You have confused investing in the company's stock (profitable) with the company's operations (not so profitable). That said, it seems Amazon is rolling their money back into growing the business rather than building a cash hoard the way Apple did. It appears that investors are happy either way for a while, then they want to see some of the money.
          • by msauve (701917)
            You're the one who's confused. I was responding to the GP, who claimed "Given the opportunity cost of the money an investor spent on buying Amazon stock, it's pretty much effectively a loss."

            Amazon increased their net assets by about $3/share FY12-FY13 (on revenue per share of ~$170, so less than 2%), so re-investment doesn't explain their lack of significant bottom-line profits. They're just working on low margins.
    • Breaking even for them is more along the lines of a 7% profit. Anything below that is a loss. If Amazon makes 0.7% profit investing in itself or makes 7% investing in the market in general (like an S&P 500 index fund which averages year to year around 7%), 0.7% represents a loss of 6.3% not a profit of 0.7%.
      • This sounds more like you are describing Amazon shareholders making 6.3% less than what shareholders of other companies might make. That is not a loss to the company. You do understand that shareholders and the company are different entities don't you? You exhibit the warped logic that drives cowtowing to short sighted shareholders (I think calling them investors after this long in business might be disingenuous) who want immediate gratification and not to long term stable growth. If someone doesn't like it
      • by sjames (1099)

        In other words, it's fucked up market math. The same screwy math that claims adding $0.05 cost to a bill of materials will magically increase the retail price by $5.

        0.7% profit may or may not be worthwhile, but it is not a loss. They can run forever on that.

  • by tekrat (242117) on Friday July 25, 2014 @09:52AM (#47530733) Homepage Journal

    Any company willing to tell it's investors "screw you", because they are looking long-term instead of focusing only on quarterly gains, that's a company I'm willing to invest in.

    It's a sad state of affairs in the USA that almost every public company, without question only looks as far as their next quarterly report, and no further down the road. This is why all these businesses are run by idiots that can't even tell you what their company even *does*, because they are so focused on manipulating the stock price and their personal bonuses.

    One reason the Japanese kicked our asses in the 1980's is that they were looking at 10-year plans while the USA looked only to the next quarter. Now the Chinese are doing the same, with long-term strategies, and we continue to have not learned our lessons.

    So, if Amazon is looking long-term, then they are better managed than 99% of USA businesses. That's a company I can believe in. And I'll invest in that.

    • by ERJ (600451)
      I don't disagree with your premise. Long term strategic planning is something that is very lacking these days. That being said, you can't just say "it will work out" which is kinda what Amazon seems to be doing. Retail is a hard game. Sure Amazon has other things brewing but their bread and butter is retail. Microsoft, Apple, IBM, Google, they can get away with doing heavy R&D and having some bad quarters but in retail you really kinda need to stay at least a bit profitable.
    • Re: (Score:3, Interesting)

      by Anonymous Coward

      Considering Amazon has had maybe 5 profitable quarters in 20 years, I'd say they most definitely aren't looking long term. Amazon is a skunk, always has been. People like you are just too fucking stupid to realize it and hand your money over to the clown Bezos.

    • It's a sad state of affairs in the USA that almost every public company, without question only looks as far as their next quarterly report, and no further down the road. This is why all these businesses are run by idiots that can't even tell you what their company even *does*, because they are so focused on manipulating the stock price and their personal bonuses.

      One reason the Japanese kicked our asses in the 1980's is that they were looking at 10-year plans while the USA looked only to the next quarter. Now the Chinese are doing the same, with long-term strategies, and we continue to have not learned our lessons.

      I don't doubt that long-term strategy is important, but focusing exclusively on that is the sure road to ruin. For example, the Japanese were kicking our asses in the 1980s. How did that turn out? To win at business, you need to maximize your current position without harming your future growth. It's a tough line to walk, but you need both - or you either kill your future for the present, or simply cannot survive to the future.

    • by Sockatume (732728) on Friday July 25, 2014 @10:31AM (#47531081)

      Twenty years without turning a meaningful profit isn't a clever part of a long-term strategy, it's an entire ongoing business model. Even if Amazon wanted to turn the switch and start making money hand over fist somehow, it would take them decades to transform the kind of business they're in.

      Amazon, as it exists now, will never be a wise investment.

    • One reason the Japanese kicked our asses in the 1980's is that they were looking at 10-year plans ...

      It is also one of the reasons why Japan has stagnated for the past 15 years. They kept plowing profits back into failing "zombie" companies. Japan would have been much better if they had returned some of their profits to their investors so the investors could invest in the next new shinning thing. Instead the Japanese conglomerates kept everything to themselves. One could argue that South Korea's chaebol are worse.

      The answer, of course, is about balance.

  • by sociocapitalist (2471722) on Friday July 25, 2014 @09:55AM (#47530763)

    These almost certainly aren't real loses, just tax loses. The profits have all just been shifted offshore as the big multinationals do now.

    • by hendrips (2722525)

      Probably not, actually - this loss is from their global operations, not just their U.S. business. Usually, multinational companies seek to minimize taxes by realizing profit in jurisdictions with low tax rates and costs in jurisdictions with high tax rates, but they usually do not actually under-report profits. CEOs and CFOs don't like jail very much, and tax fraud is one area of the law in the U.S. that's enforced nearly as zealously against the rich and famous as against normal people.

  • When I read the summary, I couldn't believe that Amazon had lost over six times its revenue. Then I saw that the revenue was in billions and the net loss was in millions. Fine, $19,000 million dollars looks awkward (despite what Randall Munroe thinks) [xkcd.com], but there has to be a less confusing way to convey that information.
    • by Lazere (2809091)
      Could just write the whole number out. "The company brought in over $19,000,000,000 in revenue last quarter, but reported a net loss of $126,000,000. Sure, it looks a bit weird at first, but it does have the bonus effect of giving people a sense of scale.
  • Amazon is all about market share and building infrastructure to support that market share. So actually the main driver of amazon isn't it's store front/web presence. They sell stuff online, so do thousands of other people out of there garages. What they are driving for in the warehouse/delivery infrastructure to deliver anything, anywhere fast and at the lowest cost. By doing that they can simply offer the same things, faster and cheaper than anyone else.

    But that involves building warehouses in strategic lo

    • Even though Amazon has very good prices I find the most value in being a Prime member spending less time tracking down what I need. I don't have to drive...I don't have to find...I don't have to guess. The reviews are right there and the customer service is great. Click, shows up in 1.5 days...and I live in the deep countryside. Anything that removes my dependence on Wal-Mart's shitty retail and grocery management is a great thing.

  • "The more items Amazon sells to Prime members, the more money it loses." What bookshops have been saying for a decade is that Amazon is selling books at a loss, which used to be illegal as anti-competitive monopoly activity.

    Much better than the opaque NYT article linked is this December article from IBT: "Amazon: Nearly 20 Years In Business And It Still Doesn't Make Money, But Investors Don't Seem To Care" http://www.ibtimes.com/amazon-... [ibtimes.com] It has the quote above, and the historic profit/loss graph I was lo

  • 23% revenue growth! (Score:5, Informative)

    by timeOday (582209) on Friday July 25, 2014 @10:27AM (#47531051)
    Amazon's revenue grew 23% over the same quarter last year. If the company were not growing AND not profiting, that would be bad. But as large as Amazon's revenues now are, to still be growing that fast is very impressive, and proves they could start taking profits at any moment simply by pocketing more revenue instead of re-investing.
    • ...they could start taking profits at any moment simply by pocketing more revenue instead of re-investing.

      Accounting tip: infrastructure investment doesn't show up in a profit and loss statement. It is only relevant for cash flow, and I don't think anyone accuses Amazon of managing cash poorly. Amazon isn't profitable because their sale prices are so close to the costs of the goods they sell. They can't stop any of these losses because they can't sell anything without first buying it from someone else. The only ways for them to increase profitability of their retail business are to raise prices (which they

      • by timeOday (582209)
        I would like to understand this. The article says that losses for the next quarter are expected to be larger: "Mr. Szkutak listed some of the reasons: Amazon Web Services is in a price-cutting war with Google and others. Six new warehouses have opened. And the company will spend $100 million on new content to put on those phones and Kindles."

        The warehouses, at least, are quintessential infrastructure investment. You are saying Szkutak is incorrect in asserting they cut into short-term profits?

      • by jbengt (874751)

        Accounting tip: infrastructure investment doesn't show up in a profit and loss statement.

        Actually it does show up there, but it's amortized over several years/decades.

      • by snarkh (118018)

        This is a strange claim. Building a warehouse or any other infrastructure spending is an expense and will affect the profits, of course.

  • I have to admit that I don't care for the way they treat their employees, but I admire a company that values long-term profits over the short-term. I'm so conflicted now.
  • Just seems like a bad move. Microsoft has been trying and failing to crack that market for a decade, Blackberry's been pushed out. This is not a market crying out for new players.
    • by 0123456 (636235)

      They're getting into the phone business for the same reason Apple did; to tie phone users to their app/video/ebook/music stores.

      I haven't looked in detail, but I presume the phone is using their version of Android, like the Kindle?

  • The cost of Prime will be going up. Again.
  • Amazon isn't out of expansion area. Their target is all of retail, and there's still a lot of non-Amazon retail. Most other big US companies with lots of cash have hit their natural limits.

    Trying to go beyond those limits is tough. Google has not been successful in expanding beyond ads. (Android only makes money as an ad platform; Google's phone revenue is small.) Apple has a lot of cash, but can't find any way to use it that will yield the kind of margins Apple is used to. Facebook is still growing, bu

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