Earlier quoted context omitted.
Yeah, that was my thought too. > John offered three choices to rival refiners, cash, Standard Oil stock, or to get crushed ... is also a pretty good description of how Microsoft approached anyone they considered competition in the '80s and '90s: you either licensed your software to them ("cash"), sold your company to them ("stock"), or got destroyed by them. Gates' charitable efforts have earned him a warmer and fuzz…
Hmm, does his charitable efforts these days make up for the pain and suffering he caused back when he was a barracuda? (nice term, btw). I like to say yes. I think. I mean, he may have destroyed hundreds of people's livelihoods/jobs/companies, but his efforts these days are literally saving peoples lives. Does anyone have an opinion on this? I'm a firm believer people can change and while this might not be Bill Gates…
Why Amazon Has No Profits and Why It Works
251–260 of 272 posts
Re: Why Amazon Has No Profits and Why It Works
#252Earlier quoted context omitted.
As the article points out, they don't. By running the business this way they are constantly building / growing new businesses but during a downturn they just build more slowly (rather than lose money). It is a very different way of operating but one which has provided some interesting benefits for them. Nominally a business uses profits to either pay dividends or fund unexpected opportunities (like buying some small…
"Interestingly enough, after reading that, I realized that Google doesn't stand a chance in hell of beating them at commerce." I used to work for a strapping start-up. Our competition had a lot more money, and people than us... but it didn't really matter because we were smarter in how we approached building the product. The future of eCommerce is going to be very heavily dependent on AI & robots. Product Suggestions…
google has trouble turning technology into businesses, apart from advertising.
a bit like Xerox and its PARC
Re: Why Amazon Has No Profits and Why It Works
#253Earlier quoted context omitted.
Blimey. Fascinating. Sounds like a rather frightening and ruthless individual. Am curious. What would your nominations be for the Rockefeller of the tech (software/hardware) world? Ever thought about that?
Bill Gates with Microsoft. At its peak Windows was running on 90% of computers and the biggest rival Apple (Steve Jobs) was taking money from Microsoft (Bill G) to survive. Bill was able to leverage almost all other software companies to create software for Windows to create a lock in fro the customers.
Microsoft's $150MM investment in Apple wasn't necessary for Apple to survive. The commitment it signaled (plus the promise to keep making Office for Mac) might have been, but the money wasn't.
> The day before the announcement Apple had a market cap of $2.46 billion,[58] and had ended its previous quarter with quarterly revenues of US$1.7 billion and cash reserves of US$1.2 billion,[59] making the US$150 million amount of the investment largely symbolic.
http://en.wikipedia.org/wiki/History_of_Apple_Inc.#1996:_Ret...
Re: Why Amazon Has No Profits and Why It Works
#254Check out Simon Wardley for some insight into what games Amazon may be playing, specifically on cloud. http://www.infoq.com/interviews/Cloud-Landscape-Simon-Wardle...
"This is a model known as ILC, which stands for innovate leverage commoditize. The model is pretty simple: what you do is you provide a commodity service, you enable everybody else to innovate on top of it. They are actually your research and development group. You do not bother to do it yourself, you get everybody else to build on your services. Anything which is successful and starts to spread in your ecosystem, you can identify through consumption information, so you can leverage the ecosystem to spot successful development and then you commoditize these new components."
Re: Why Amazon Has No Profits and Why It Works
#255Earlier quoted context omitted.
As others have written downthread, it's probably at least worth the pro-rated value of their assets at fair market value. That said, the classic theoretical valuation of a stock is the net present value of their dividends--i.e. the cash you receive from the company. Obviously this doesn't work very well as a stock pricing proxy for most companies. But if you factor in things like estimated acquisition price, you get…
Right, I mean it makes perfect sense if the dividends have some expected future value. But my parent was saying they don't need to make a profit. If they never turn a profit, the expected future value of the dividends is $0.
Only if they certainly never turn a profit. If there's some possibility, it will be above $0.
Re: Why Amazon Has No Profits and Why It Works
#256Earlier quoted context omitted.
There has been a distortion in the markets lately with the value of cash. Over the long term, buying a share of any company (Amazon, Intel, Walmart) has to give a return to the holder of that share. Otherwise, you are trading cash to hold onto a piece of paper and get it returned back as cash when you sell it. This invalidates the time value of money. In other words, if I am not getting a quarterly/annual dividend (i…
By this argument, a bar of gold invalidates the time value of money. So does the existence of artwork.
Artwork pays a convenience yield. You can look at it.
But I definitely agree with the gold example.
Re: Why Amazon Has No Profits and Why It Works
#257Re: Why Amazon Has No Profits and Why It Works
#258Earlier quoted context omitted.
Where "becoming a giant, profitable company" is another way of saying "paying their shareholders". Amazon is making money, for all intents and purposes they are profitable. They've just found something more interesting to do with that money than pay dividends. The opponent in this scenario is the shareholders, they're the ones who want to take the money away from Amazon. It's a very interesting dynamic, certainly not…
> The opponent in this scenario is the shareholders, they're the ones who want to take the money away from Amazon. Take the money away from Amazon? The shareholders are Amazon. It isn't Amazon's money, it's the shareholders. If/when they want dividends instead of re-investment (which doesn't seem to be the case yet), they are entitled to it.
> If/when they want dividends instead of re-investment (which doesn't seem to be the case yet), they are entitled to it.
In theory, yes. In practice, being an activist shareholder and going against the wishes of management is _hard_.
Re: Why Amazon Has No Profits and Why It Works
#259Earlier quoted context omitted.
That 1% means nothing without knowing how much of that retail revenue currently goes through e-commerce. But I have sneaking suspicion that there's still a lot of room for growth. Also, outside of the US Amazon has just barely started to expand beyond books. In most countries online retailers are bracing themselves for the moment Amazon starts eating their lunch. Unless Bezos suddenly has a change of heart, this grow…
> outside of the US Amazon has just barely started to expand beyond books. Not sure it's correct. For example amazon has a 2-day service across Europe from any amazon warehouse in the continent. But maybe what they do is not enough for Europe?
Asia is a bit less well served. Australia not at all apart from digital goods.
Re: Why Amazon Has No Profits and Why It Works
#260The real question is this: does the dollar of earnings Amazon retains generate more than a dollar of value for owners of the company (i.e. shareholders)? I don't know either way, and I don't want this post to seem like a criticism of Amazon. I know some people who work in upper level management there and they all speak very highly of the way the company is run (very meritocratic). But reinvesting earnings is only a g…
> The real question is this: does the dollar of earnings Amazon retains generate more than a dollar of value for owners of the company (i.e. shareholders)?
Taxes bias this question.