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Why is Amazon all of a sudden not re-investing all its profits?

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Re: Why is Amazon all of a sudden not re-investing all its profits?

#71

Post by serge2k »

billmalarky wrote: post #60
sixQuarks wrote: post #50

Earlier quoted context omitted.

Sorry, but Bezos and Buffet are not even in the same league as Elon Musk.

My gut instinct was to agree with you, but with consideration pbreit is correct in my opinion. Musk is more innovative in areas that matter for meaningful human progress (SpaceX as opposed to Wal-Mart 2.0), but I believe as far as "business" is concerned Bezos is on top right now. They have different priorities. Personally I'm a Musk fanboy.

Musk made money on Paypal before he started Tesla and SpaceX.

Bezos made money on Amazon before he started Blue Origin.

Plus Bezos doesn't have an obsessive internet cult worshipping him.

Re: Why is Amazon all of a sudden not re-investing all its profits?

#72

Post by benologist »

serge2k wrote: post #71
billmalarky wrote: post #60

Earlier quoted context omitted.

My gut instinct was to agree with you, but with consideration pbreit is correct in my opinion. Musk is more innovative in areas that matter for meaningful human progress (SpaceX as opposed to Wal-Mart 2.0), but I believe as far as "business" is concerned Bezos is on top right now. They have different priorities. Personally I'm a Musk fanboy.

Musk made money on Paypal before he started Tesla and SpaceX. Bezos made money on Amazon before he started Blue Origin. Plus Bezos doesn't have an obsessive internet cult worshipping him.

Bezos is a much more accomplished business man -

Tesla has ~3,000 employees

SpaceX has ~5,000

Solar City has ~13,000

PayPal has ~13,000

Total: 34,000 as they stand today which is a very generous measure since it's years after Musk left PayPal and he doesn't even work at Solar City afaik.

Amazon has ~222,000 employees, roughly 8x larger than all of those companies combined, not even counting Blue Origin, WaPo, or w/e else Bezos owns, and they did $107,000,000,000 revenue last year, slightly more than all of Musk's companies' combined value.

http://www.geekwire.com/2015/huge-growth-amazon-reaches-2224...

Re: Why is Amazon all of a sudden not re-investing all its profits?

#74

Post by roddux »

Touche wrote: post #22
mcherm wrote: post #9

Summary: Because they're "proving" they can make a profit when they want to in preparation for spending a decade investing 100% of profits into building a world-wide logistics system. (I think it's an interesting theory, but the author provided little evidence.)

So they're going to establish a vertical monopoly on online retail. Great.

You mean they didn't already?

Re: Why is Amazon all of a sudden not re-investing all its profits?

#75

Post by mandeepj »

I think all of us who aspire to be entrepreneurs can learn something from the events happened after Amazon's stock crash during last quarterly earnings. Stock price dropped to about $482. Amazon quickly announced stock buyback program and stock is up again. It was around $612 before latest quarterly earnings report. And, it is now at $659. Keep an eye on Amazon's amazing stock management skills

Re: Why is Amazon all of a sudden not re-investing all its profits?

#77

Post by brashrat »

rhino369 wrote: post #10
sharemywin wrote: post #2

I think they calculated wrong and forgot to spend all the money. They mentioned that Cloud Services was unusually more profitable this quarter.

Another thing to consider is how the money is spent changes how much profit is made. If Amazon reinvests into assets, that money isn't considered a loss. So it doesn't reduce profits. So when Amazon buys a video library those IPs are assets. You only deduct spending that are expenses. As Amazons business changes it might be harder to hide their profits in expenses.

investments in assets result in depreciations which are expenses that reduce profits; you don't write off the asset as a loss all in one year, but it all gets written off across a series of years.

Re: Why is Amazon all of a sudden not re-investing all its profits?

#78

Post by rgbrgb »

benologist wrote: post #72
serge2k wrote: post #71

Earlier quoted context omitted.

Musk made money on Paypal before he started Tesla and SpaceX. Bezos made money on Amazon before he started Blue Origin. Plus Bezos doesn't have an obsessive internet cult worshipping him.

Bezos is a much more accomplished business man - Tesla has ~3,000 employees SpaceX has ~5,000 Solar City has ~13,000 PayPal has ~13,000 Total: 34,000 as they stand today which is a very generous measure since it's years after Musk left PayPal and he doesn't even work at Solar City afaik. Amazon has ~222,000 employees, roughly 8x larger than all of those companies combined, not even counting Blue Origin, WaPo, or w/e…

IDK, employee count seems like a red herring. To me it's much more impressive to do a lot with a small number of employees (like WhatsApp's 18M users/engineer [0]). Amazon incredibly impressive, I just mark the high employee count as a point against them rather than in their favor.

[0]: http://www.wired.com/2015/09/whatsapp-serves-900-million-use...

Re: Why is Amazon all of a sudden not re-investing all its profits?

#79

Post by brashrat »

clavalle wrote: post #63
pbreit wrote: post #42

Earlier quoted context omitted.

Bezos understands that the value of a stock is its discounted future cash flows.

Discounted future /free/ cash flows. That's cash flow minus capital expenditures which means, at some point, Amazon is going to have to decide enough is enough and allow overall cash flow to come in well above its capital expenditures...like it's just done. Better a bit sooner than later (thanks to the discount part) if you think can sustain your advantage for less than you've been spending in proportion to your reve…

if we're going to quibble, it's "discounted /expected/ future cash flows"

Re: Why is Amazon all of a sudden not re-investing all its profits?

#80

Post by coredog64 »

ChuckMcM wrote: post #45
rodionos wrote: post #34

Earlier quoted context omitted.

Is this "tuning" typically done on the revenue side or the cost side? I'm surprised it's at all possible with proper revenue and cost recognition policies in place.

At Sun there was literally a taped square on the floor of the factory, and things in that square were "shipped" to as the quarter was finishing up the factory would figure out how much had to be shipped to make the numbers, and they would process enough orders to make that happen. If there weren't orders, then some "one time deals" would be mentioned to top customers who might get a really nice discount or something.…

When I was at OnSemi, we had multiple calls for mandatory vacation. Paid leave is a liability on the books, so by forcing employees to take it, they could make the numbers look better. The message from management each time was "We know we told you last time that it would never happen again, but..."
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