If everyone is is afraid of Amazon, then Amazon should be afraid of everyone. Potentially any one of them can topple amazon. The truth is, amazon hasn't killed any companies other than certain old bookstores. Have they killed walmart, costco, ebay, target, macys ? Nope, not even close.
Who’s afraid of Jeff Bezos?
81–86 of 86 posts
Re: Who’s afraid of Jeff Bezos?
#82Let's not overlook Jack Ma of Alibaba. When it started Taobao in China to compete with eBay China, eBay had 85% of the online auction market in China. Within a few years, eBay was forced out of the China market completely. And if one looks at Taobao closely, its model is much friendlier to small businesses and that's the main driver of its success. I wouldn't be surprised if Taobao starts competing with eBay globally…
China is not a normal market. It's clear that the communist party has their hands in all the pies, and where they can promote Chinese companies, foreign ones will suffer intense competition or be forced out of the market.
I'll start paying attention when Taobao actually competes outside of China before proclaiming it's success over eBay.
Re: Who’s afraid of Jeff Bezos?
#83Earlier quoted context omitted.
1. I'm not so sure about that. According to the most recent financial statement[1], AMZN hasn't generated much in the way of net cash from operations over the past 12 months. Worse yet, they're spending an amount in excess of that on investments (some of which is really capitalized operating expense, like internal software development, that companies like MSFT expense directly). In fact, for the 12 months ended 6/30/…
There are quite a few companies I know that exist for decades now who are living on a (relativly) low margin and cash flow focus. Most of them are retail discounters. And by coincidence these very companies are eating up market share from other retailers. The whole eCommerce business of Amazon is very supply chain heavy, and here they are among the best (along companies like Apple and McDonalds). On the other hand I…
Point 1. Yes, low margin/cash-generative businesses exist, like grocery stores and well, pretty much all of hardline (and much softline) retail. AMZN has not yet generated much profit or much distributable cash flow, relative to their revenue scale (and normalizing their expense base, for things like leases and capitalized software).
My point regarding Walmart was that, even with many of the historical expenses (like trucks) that they no longer bear, they were still more profitable throughout their history than Amazon has ever been. Why?
Point 2. I don't think we disagree, as I'm referring to the long term, not the short term. In most circumstances, a business can't be both unprofitable and cash-flow positive indefinitely, unless there is something very strange happening with the accounting (like unusual tax losses a la GE Capital).
Profits and free cash flow can and do diverge for short periods in the company's lifecycle, but they ultimately must converge in terms of sign/direction.
Re: Who’s afraid of Jeff Bezos?
#84Earlier quoted context omitted.
1. I'm not so sure about that. According to the most recent financial statement[1], AMZN hasn't generated much in the way of net cash from operations over the past 12 months. Worse yet, they're spending an amount in excess of that on investments (some of which is really capitalized operating expense, like internal software development, that companies like MSFT expense directly). In fact, for the 12 months ended 6/30/…
Umm... What? The 10-Q you just posted says AMZN pulled in $4 Billion in cash equivalents for the quarter which is almost double what they did the last equivalent quarter. It also says they have $8 billion in the last 6 month period whereas the year before they had $5 billion in the same 6 month period. My point wasn't that they are making a profit, my point is that they are pumping enormous amounts of money into thei…
I'm not sure where you're looking. Page 3, Consolidated Statements of Cash Flows. Last 12 months ended 6/30/2013, $4.5B CFO, ($5.8B) CFI, $2.8B CFF. Without issuing debt, their net cash would have decreased.
You are essentially arguing that the investment expenditures will fade over time, leaving Amazon strongly free-cash-flow positive.
I am saying that, at present, the only reason they generate cash is that they issued debt, and that we need to look carefully at the nature of the cash expenditures on investments, as I believe many will likely continue (and that some of them are really recharacterized operating expenses).
The question is whether those investment expenses are truly optional/one-time. Neither of us knows for sure.
Re: Who’s afraid of Jeff Bezos?
#85I will make the bold claim that within 10 years amazon will fall apart at the seams like a cheap suit in a storm. You cannot run a non profit forever no matter how large your market share is or how obsessed you are about customers. The culture (from what we can glean from the excerpts of the new book on Bezo's) is also toxic and is unlikely to produce an enduring successful company. Senior execs can't pass gas withou…
You don't seem to actually understand Amazon's business. First of all, there isn't even a remote threat to their retail empire. Everybody else is a drastically distant joke. They're already the size of Target, and they're still growing rapidly. Nobody stands a chance at catching them. Walmart.com continues to just flail in the wind. That means they're going to end up with a monster position that can't be assaulted in…
>First of all, there isn't even a remote threat to their retail empire.
How about Alibaba? They already have more revenue than Amazon and eBay combined.
Re: Who’s afraid of Jeff Bezos?
#86Earlier quoted context omitted.
There are quite a few companies I know that exist for decades now who are living on a (relativly) low margin and cash flow focus. Most of them are retail discounters. And by coincidence these very companies are eating up market share from other retailers. The whole eCommerce business of Amazon is very supply chain heavy, and here they are among the best (along companies like Apple and McDonalds). On the other hand I…
Point 1. Yes, low margin/cash-generative businesses exist, like grocery stores and well, pretty much all of hardline (and much softline) retail. AMZN has not yet generated much profit or much distributable cash flow, relative to their revenue scale (and normalizing their expense base, for things like leases and capitalized software). My point regarding Walmart was that, even with many of the historical expenses (like…
over the whole life cycle of a company, ok. Not on the exact mumbers but wether wether profits and cash flow are positive or negative. Chancea are that in the worst case the short term effects already killed the company in question, though.
Regarding Amazon, they are profitable enough. Cool thimg is they are building the fullfillment centers by the dozens, payed from free cash flow. And thats pretty amazing I think. But you are right, in the long run Amazon will most likly hit a growzh cieling. When they do they will have to changw strategy.