Selling more, making less: Amazon’s Q1 2012 report
You know, it amuses me when some people paint Amazon as this greedy corporate monster, just piling up huge profits at the expense of society.
Really? If that’s the case, they’re seriously bad at it.
It would be like a tyrant punishing people by giving them paid vacations to Disneyland…
Let’s leave the “expense of society” out of it for now, because that’s pretty hard to judge and somewhat subjective.
How about profits?
Amazon says that net income for the first quarter of 2012 was down a whopping thirty-five percent from the first quarter of 2011.
This certainly isn’t a surprise: they’ve been spending like crazy in that past year. They launched a very different hardware product in the Kindle Fire. They’ve been signing deals for videos for Prime. They’ve been paying millions of dollars to publishers when customers borrow their books.
Sales are way up: thirty-four percent comparing the first quarter of 2012 to the first quarter of 2011.
It always seems a bit weird to me how the stock market reacts.It isn’t how you did: it’s how you did compared to how they thought you would do.
“Wow! You didn’t flunk that class and got a D? Let’s party!”
Amazon stock is going up on this news, because people thought their income loss would be more than it was and/or that their sales would be lower.
Amazon is a long term investment. They are building the future, and that might be at the expense of the present.
Let’s be honest: Apple made a lot of profit in Q1. If you have a short-term view, if you are looking at current state, Apple is doing better.
However, if you are looking at where things may be ten years from now, that might be different. Will Apple continue to transform the businesses in which it is the leader? Sure, that’s possible. Will Amazon do that? I’d bet on it. Yes, I might lose big…but I would think that Amazon will be the top of the heap or buried at the bottom, not in the middle.
They will have been right or they will have been wrong…but they won’t have been asleep.
Update: this is an amusing
about the Q&A section of the conference call. That’s often the most interesting part, although usually, not much concrete comes out of it. Nothing big slipped out of the call and into the news.
Update: I thought one interesting exchange in the Q&A was the one about how much of Amazon’s sales (around the world) are subject to the same sales tax or VAT tax as brick-and-mortars. The answer was about 50%. Of course, in the USA, they can claim Nevada, which doesn’t have sales tax. The follow-up was asking whether that had slowed sales…and the answer was essentially no. You would think, then, that Amazon might support a national sales tax policy…and they do, publicly and very much so.
They have posted the recording:
This post by Bufo Calvin originally appeared in the I Love My Kindle blog.