Amazon Reports First Quarterly Loss in 4 Years • Hacker News Board

Re: Amazon Reports First Quarterly Loss in 4 Years

#61

Post by confluence » Fri, Oct 26, 2012, 3:36 AM UTC

jlgreco wrote: post #58

confluence wrote: post #54

Earlier quoted context omitted.

Enron didn't look like a good idea. They ran a commodity business at insane valuations with huge revenue run up during a bubble. Stating that Enron was a good idea was like stating Groupon was a good idea. Commodity companies that buy revenue (includes WorldCom and MCI) are always bad investments. Once again - had you invested in them you would be a moron. It'd be fair to state that diversification protects against s…

Put it this way, from the outside they looked a lot better than they really were. Looking as bad as Groupon and actually going as sour as Enron did are two wildly different things.

I fully expect Groupon to go bankrupt.

Re: Amazon Reports First Quarterly Loss in 4 Years

#62

Post by jlgreco » Fri, Oct 26, 2012, 3:41 AM UTC

confluence wrote: post #61

jlgreco wrote: post #58

Earlier quoted context omitted.

Put it this way, from the outside they looked a lot better than they really were. Looking as bad as Groupon and actually going as sour as Enron did are two wildly different things.

I fully expect Groupon to go bankrupt.

I wouldn't say Enron merely went bankrupt...

Re: Amazon Reports First Quarterly Loss in 4 Years

#63

Post by robryan » Fri, Oct 26, 2012, 3:55 AM UTC

ahi wrote: post #8

malandrew wrote: post #5

Earlier quoted context omitted.

I'm guessing everyone is waiting until Amazon is the only game in town and can increase margins every product but those that would allow a new competitor to survive to profitability. Once they are in a position to increase margins without risk of lost market share, the current valuation will be justified.

> Once they are in a position to increase margins without risk of lost market share That day may never come. edit: Every quarter with margins in the single digits is additional evidence that it won't.

I fully expect it to never come. I don't think it really matters. Amazon will continue to take market share off physical retailers, expand its product range and push into new markets.

Re: Amazon Reports First Quarterly Loss in 4 Years

#64

Post by e28eta » Fri, Oct 26, 2012, 3:57 AM UTC

simonh wrote: post #9

malandrew wrote: post #5

Earlier quoted context omitted.

I'm guessing everyone is waiting until Amazon is the only game in town and can increase margins every product but those that would allow a new competitor to survive to profitability. Once they are in a position to increase margins without risk of lost market share, the current valuation will be justified.

Fresh competition is never more than a click away. I get that Amazon is playing the long game, forgoe profits now to build a dominant company for the future. But how long have they been playing this long game for? How much longer before it pays off? This is a 17 year old company. People younger than Amazon are getting married and having kids.

During that time, they've been building an amazing infrastructure, and that won't be easy for a new competitor to match.

I ordered from a different retailer last Saturday night, and I had forgotten how long it takes to get stuff shipped in the real world: FedEx didn't receive the package until Tuesday at 8pm. With Prime, I'd already have it by Tuesday night.

Shipping speed isn't the most important aspect of online shopping, but I think it's indicative of how Amazon's size is already providing a competitive advantage that is hard to match.

Re: Amazon Reports First Quarterly Loss in 4 Years

#65

Post by codeonfire » Fri, Oct 26, 2012, 4:05 AM UTC

icefox wrote: post #22

lotsofpulp wrote: post #14

Earlier quoted context omitted.

Wal Mart's profit margins are only a few percentage points, maybe 5% if they're lucky. That's the nature of retail. There definitely seems to be some utility and efficiency gains being made by Amazon. I doubt investors are seeking the kind of explosive growth or profits seen in tech companies like Apple, but rather a steady gain in market share from companies like Wal Mart, Best Buy, and whatever else you can deliver…

Hmmm I wouldn't normally say a P/E of 272.63 is a bet on slow steady growth.

Why, because of the large amount of reinvestment that makes E trend towards zero? How does P/E signal anything about a growth strategy?

Re: Amazon Reports First Quarterly Loss in 4 Years

#66

Post by gsmaverick » Fri, Oct 26, 2012, 4:06 AM UTC

lotsofpulp wrote: post #31

icefox wrote: post #22

Earlier quoted context omitted.

Hmmm I wouldn't normally say a P/E of 272.63 is a bet on slow steady growth.

I agree, but it seems to be a fundamentally different scenario than other companies with sky high P/Es such as LNKD and FB. While LNKD and FB have yet to figure out how to monetize their product, AMZN has a relatively simple (and demonstrated) growth plan. I think many investors are simply betting that Amazon will be able to capture significantly more of the retail market, and/or new revenue streams from places like…

Are you writing this comment from 2008? Both LNKD and FB have robust revenue streams that are growing; they have figured out how to monetize their products and they are doing it quite well.

Re: Amazon Reports First Quarterly Loss in 4 Years

#67

Post by Bry789123 » Fri, Oct 26, 2012, 4:55 AM UTC

ChuckMcM wrote: post #25

simonsarris wrote: post #3

Shares already recovering, loss was "better" than expectations, a lot of their spending is on important business stuff (warehouses, kindle, web properties) that will yield returns later. In other words, revenue is nearly identical and there's no profit, presumably because of these new things. Amazon is one of the few very large companies that has extremely high potential for growth. I made an OK amount of money buyin…

Back during the dot.com days Yahoo Finance had a game where you could "play the market." (take note entrepreneurs this could be a lifestyle business :-) For each group you got $100,000 to invest and you were in competition with other people in your group for best return. I lost about $75,000 on Amazon stock :-). However, my actual portfolio has done ok with Amazon so I'm not complaining.

Our school once had this competition as well. Given the short time period of these competitions, you have to buy high beta stocks in order to do well, or very low beta if the market is falling overall.

In order to win this a friend and I decided to team up and split the winnings. Basically what we did was to get one of us to buy the riskiest investments that we could (penny stocks, other low cap stocks, risky derivatives etc.) and the other would short them. This way over the course of the few weeks one of us would be dead last, and the other far ahead.

Worked like a charm.

Re: Amazon Reports First Quarterly Loss in 4 Years

#68

Post by gamble » Fri, Oct 26, 2012, 4:56 AM UTC

e28eta wrote: post #64

simonh wrote: post #9

Earlier quoted context omitted.

Fresh competition is never more than a click away. I get that Amazon is playing the long game, forgoe profits now to build a dominant company for the future. But how long have they been playing this long game for? How much longer before it pays off? This is a 17 year old company. People younger than Amazon are getting married and having kids.

During that time, they've been building an amazing infrastructure, and that won't be easy for a new competitor to match. I ordered from a different retailer last Saturday night, and I had forgotten how long it takes to get stuff shipped in the real world: FedEx didn't receive the package until Tuesday at 8pm. With Prime, I'd already have it by Tuesday night. Shipping speed isn't the most important aspect of online sh…

The fact that people are willing to wait a couple of days for Amazon when they can buy exactly the same product immediately for slightly more money at the local Best Buy speaks to how much they're willing to put up with for a marginal cost savings. I think that anyone who expects a "sinister phase II" where Amazon takes advantage of their market share by jacking up prices fundamentally misunderstands Amazon. They are, and always will be, a low-margin retailer.

Re: Amazon Reports First Quarterly Loss in 4 Years

#69

Post by wiredfool » Fri, Oct 26, 2012, 6:38 AM UTC

gamble wrote: post #68

e28eta wrote: post #64

Earlier quoted context omitted.

During that time, they've been building an amazing infrastructure, and that won't be easy for a new competitor to match. I ordered from a different retailer last Saturday night, and I had forgotten how long it takes to get stuff shipped in the real world: FedEx didn't receive the package until Tuesday at 8pm. With Prime, I'd already have it by Tuesday night. Shipping speed isn't the most important aspect of online sh…

The fact that people are willing to wait a couple of days for Amazon when they can buy exactly the same product immediately for slightly more money at the local Best Buy speaks to how much they're willing to put up with for a marginal cost savings. I think that anyone who expects a "sinister phase II" where Amazon takes advantage of their market share by jacking up prices fundamentally misunderstands Amazon. They are…

From my experience, sitting on the couch and ordering something is a whole lot easier than actually going out and getting it. And it comes right to the door. In a day or two. Subscribe and save was even better when the kids were little. Diapers and wipes. Delivered automatically.

I don't find that amazon's prices are that amazingly good. Sometimes they're better, sometimes they're not. I've found small things for half the price in local shops sometimes. Newegg will beat them for anything electronic, but their shipping is really erratic. And since I'm in WA, there's no tax savings.

Maybe I'm a special case. I don't live in a big city, but you can see one from the beach. It's 45 minutes to Walmart, 2x that to Target, Trader Joe's, the Apple Store and other pillars of civilization. Hell, it's 10 minutes to the nearest store (plus whatever time it takes to get the kids into shoes and strapped into the car).

Amazon wins on predictable convenience. They're the biggest store in the world, and they're right here. And whatever I want will be here in 2 days, shipped free. (yeah, we have prime. it's like crack)

Re: Amazon Reports First Quarterly Loss in 4 Years

#70

Post by donavanm » Fri, Oct 26, 2012, 7:29 AM UTC

dinkman wrote: post #24

With its price-to-earnings multiple in the stratosphere, Amazon often comes up in conversation as being "overpriced." While this conclusion may be true, it's not because Amazon is unprofitable... Publicly traded companies optimize for return-on-invested-capital (ROIC), which includes profits (dividends) plus increases in equity value (share price). Stable companies in stable markets often make the greatest returns by…

Get big fast. Amazon is still getting bigger, and accelerating the pace recently.

The "low margin retailer" comments about AWS are funny too. AWS is effectively a billion dollar company, eligible for HUGE subsidies (from retail), under effectively no pressure for revenue/profits, and is ok with 3% margins. That sounds like a nightmare to compete with.