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Amazon.com Announces Second Quarter Sales Up 20%

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Re: Amazon.com Announces Second Quarter Sales Up 20%

#91

Post by jjeaff »

ethbro wrote: post #88
spenczar5 wrote: post #78

Earlier quoted context omitted.

I don’t think it’s commoditized. AWS has moved past being just EC2. Virtualization is a small piece or the picture, and building and operating DynamoDB or S3 or SQS are all very tough tasks.

It's not commoditized at the scale Amazon operates it at. And from an AWS / profit perspective, running the rest of Amazon is essentially what gives them a base consumer to get them to that scale.

Which is the strange part. Because it is rather commoditized on the level that 95% of their customers are by themselves.

It's that aggregate of so many individual clients that makes it difficult. So why aren't all the small clients getting picked off by the hundreds of small competitors?

My take is that the sheer scale of AWS has hit a point where engineers (the ones making infrastructure decisions) and moving from one company to another are just more likely to be familiar with AWS at this point. The same concept makes hiring easier.

My other guess is that lots of engineers are like me and just got sick of their hosting company getting bought out and constantly having to deal with console changes and migrations.

I am with GCP now, one of the reasons I picked GCP is because they are very large and have reasons to continue offering cloud services even if it becomes commoditized and unprofitable. The same is true for AWS.

Also, of course "no one ever got fired for choosing AWS".

Re: Amazon.com Announces Second Quarter Sales Up 20%

#92

Post by t34543 »

manojlds wrote: post #86
spenczar5 wrote: post #78

Earlier quoted context omitted.

I don’t think it’s commoditized. AWS has moved past being just EC2. Virtualization is a small piece or the picture, and building and operating DynamoDB or S3 or SQS are all very tough tasks.

And RDS.

At my scale two DBAs + MySQL on EC2 is cheaper than Aurora. I believe other companies will come to the same conclusion in time.

Re: Amazon.com Announces Second Quarter Sales Up 20%

#93

Post by User23 »

mythz wrote: post #76
eloff wrote: post #73

Earlier quoted context omitted.

It's not untrue, Amazon is largely a retail business and you can't compare it's P/E to tech socks, that'd just be silly. You clearly know enough to know that, so I don't get why you insist. As for producing the numbers on the YoY for the retail companies you listed - I hope somebody else does that. I'm busy.

AWS accounts for their largest profits, growth and margins, their financials would be even worse if you compared them against retail stocks which are high capital intensive and low margin businesses, there's no way AMZN is valued as a retailer which would make their valuation even more insane.

Amazon is valued based on the implicit assumption that Bezos is a Buffet tier investing genius. So far, that assumption has held. The main difference is that Bezos invents new businesses in addition to buying them. Nobody is arguing that retail isn't a big part of their business, but it was only ever meant to be the bootstrap. It's incredibly rare to see such executive and entrepreneurial skill combined in the same individual.

Re: Amazon.com Announces Second Quarter Sales Up 20%

#94

Post by jjeaff »

MR4D wrote: post #82
brlewis wrote: post #27

Earlier quoted context omitted.

Price/Sales is 4.01, lower than GOOG, FB or MSFT. They are going for growth, not profit. No valuation metric is perfect, but P/E is particularly useless for this company.

P/E is NEVER useless. For instance, if a company misses on earnings, then maybe it was an outlier - an odd quarter of sorts. But if you do it a few times over, then you are not the growth company you thought you were, and your 100:1 p/e will come crashing down to join everybody else (albeit maybe on the high side) somewhere in the upper 20’s or in the 30’s. But here’s the key - to do that, a stock would have to lose…

But you are assuming that the end goal of the company and purpose of buying the stock is to participate in "earnings" in the form of dividends.

But that is no longer the MO of many public companies now.

The goal appears to just eternally grow the stock price and allow share holders to cash out in the form of appreciated shares which get a preferable capital gains tax treatment.

Occasional earnings are just there to prove to the market that you could make money if you wanted to. Amazon has never paid dividends and probably never will unless their shareholders are able to convince them otherwise.

To take it even further, there are additional tax advantages to capital appreciation for the wealthy that hold Amazon stock. They can even choose not to sell appreciated stock but instead get low interest loans using their stock as collateral.

Buy stock - let it appreciate - increase your line of credit - live off the borrowed money that has a lower interest rate than the stock price growth rate - continue until death - let estate sell the stock and take a one time tax hit.

Re: Amazon.com Announces Second Quarter Sales Up 20%

#95

Post by jjeaff »

dahfizz wrote: post #89
m3kw9 wrote: post #85

Earlier quoted context omitted.

PE is used as a comparison, if 10 of your peers are at 15 and you are at 30 you may be over priced or the expectations are sky high for you to grow beyond expectations

Amazon and e.g Google are not peers. The vast majority of Amazons business is retail, not tech.

That's up for debate. Of the revenues that are reported under Amazon retail, a significant portion (some estimates say way more than half) are fees collected from 3rd party sellers using both the online platform and physical warehousing services.

I would argue that portion of their retail revenue is much closer to tech than retail, considering the margins are comparable to tech companies.

Re: Amazon.com Announces Second Quarter Sales Up 20%

#96

Post by SkyPuncher »

kortilla wrote: post #90
notyourwork wrote: post #87

Earlier quoted context omitted.

Same thing as a fast food burger versus a restaurant porter house, you get what you pay for.

Analogy is a little off. AWS is fast food and expensive because consistency, availability, and volume are what count in the cloud business. You can get better quality VMs for less money but you won’t be able to provision thousands easily and it’s not going to be available 24/7.

Even further, I'd say AWS is fast food that supports dozens of niche diets - pretty much anywhere in the world, anytime.

McDonald's isn't impressive because they can make a Big Mac in 30 seconds. They're impressive because I can get almost the exact same Big Mac anywhere in the world.

Re: Amazon.com Announces Second Quarter Sales Up 20%

#97

Post by axaxs »

meowface wrote: post #81
ajross wrote: post #77

Earlier quoted context omitted.

What's interesting isn't the fact that they "make" more from AWS, it's that AWS gets premium margins where their store is running right at cost (and has been, basically forever -- it's their thing, sorta). The interesting number you left out was the non-AWS revenue, which in 2018 (too lazy to correlate with today's announcement) was $230B , literally 30x higher. AWS is a tiny drop in the bucket, no matter what the pr…

AWS is basically "run your entire company's engineering as a service" now, and they've done a good job at it. It's not at all easy to compete with such an integrated and battle-tested platform (other than on cost; AWS can be pretty expensive).

This is absolutely true, sure, but the UX is dreadful. If someone like, say, DigitalOcean who has nice design spent the money to actually compete, I'd move in a heartbeat. Google is a nonstarter, and Azure is a 'maybe'. Most people use a few key services. Everytime I log in, I'm slammed with 200 tiny hyperlinks.

Re: Amazon.com Announces Second Quarter Sales Up 20%

#98

Post by [deleted] »

spenczar5 wrote: post #78
ajross wrote: post #77

Earlier quoted context omitted.

What's interesting isn't the fact that they "make" more from AWS, it's that AWS gets premium margins where their store is running right at cost (and has been, basically forever -- it's their thing, sorta). The interesting number you left out was the non-AWS revenue, which in 2018 (too lazy to correlate with today's announcement) was $230B , literally 30x higher. AWS is a tiny drop in the bucket, no matter what the pr…

I don’t think it’s commoditized. AWS has moved past being just EC2. Virtualization is a small piece or the picture, and building and operating DynamoDB or S3 or SQS are all very tough tasks.

[deleted]

Re: Amazon.com Announces Second Quarter Sales Up 20%

#99

Post by zmmmmm »

ajross wrote: post #77
carlsborg wrote: post #5

Two interesting points: 1) Close to 70% of Amazon operating income once again can be attributed to AWS. Consolidated operating income: $3,084 m AWS operating income: $2,121 m 2) AWS revenue was $8.3B for the quarter, 37% more than the same quarter last year.

What's interesting isn't the fact that they "make" more from AWS, it's that AWS gets premium margins where their store is running right at cost (and has been, basically forever -- it's their thing, sorta). The interesting number you left out was the non-AWS revenue, which in 2018 (too lazy to correlate with today's announcement) was $230B , literally 30x higher. AWS is a tiny drop in the bucket, no matter what the pr…

It's not commodotized at all. They have successfully achieved the jump to be the "nobody got fired for choosing company X" of cloud computing. Everybody trusts them. I've been directly involved in planning out cloud migration for an organization and put forward other options that were substantially cheaper but it didn't matter: they wanted AWS.

Re: Amazon.com Announces Second Quarter Sales Up 20%

#100

Post by rb666 »

axaxs wrote: post #97
meowface wrote: post #81

Earlier quoted context omitted.

AWS is basically "run your entire company's engineering as a service" now, and they've done a good job at it. It's not at all easy to compete with such an integrated and battle-tested platform (other than on cost; AWS can be pretty expensive).

This is absolutely true, sure, but the UX is dreadful. If someone like, say, DigitalOcean who has nice design spent the money to actually compete, I'd move in a heartbeat. Google is a nonstarter, and Azure is a 'maybe'. Most people use a few key services. Everytime I log in, I'm slammed with 200 tiny hyperlinks.

We are looking to move some of our applications to the cloud and Kubernetes the coming time. We'd like to go for DO, partially for the horror the AWS interface appears to be. Could you give me an idea what we'd be missing by choosing DO over AWS? (as your comment appears to say we would)
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