Amazon’s Q1 financials: investors like this one
As an Amazon customer (and not an employee, just to be clear), I usually like Amazon’s financial statements. They have shown innovation and investment in making their customers happy. In fact, I often refer to Amazon’s happy customers as their most important “product”. 😉 Carefully curated access to customers (providing access to services they actually want, for example) is a big part of Amazon’s future…whether that’s through more traditional ads or simply through a “carrier” strategy, with Amazon being what I call the infrastructure of the internet. On that latter one, one way that would work would be Amazon charging a free music service to be available through Echo products. No ads there, but the access can reasonably be monetized (not with the customer paying, but with the producer paying).
Investors, though, haven’t always liked Amazon’s financial reports. They didn’t make a profit for a long time (that’s been changing recently). Rapidly improving sales are good for customers (they demonstrate engagement), investment in licensing/producing) content (movies/TV shows and more) is good for customers, but those aren’t directly short-term good for investors.
Amazon’s
Webcast (and associated materials)
yesterday has gotten quite a bit of positive buzz, and the stock is up 3% based on this
In the
gives you the highlights. Having an increase in sales (23%) compared to the same period last year and net income up (41%) while maintaining the #1 ranking in corporate reputation is a rare combination and makes everybody happy.
The press release calls out (from of Amazon CEO…Chief Executive Officer…Jeff Bezos) the strength of Amazon in India. That’s key: customers in the USA might wonder how much more growth Amazon can have here (actually, they can still have a lot), but I have readers around the world…and Amazon increasingly has customers around the world. They are finally going to be able to make a real move in much of the Middle East, and they’ve got a lot of growth potential in Latin America (just to name two areas).
My favorite part of these calls is the question and answer part. As you can read in the
this one didn’t disappoint.
I want to first commend Brian T. Olsavsky, Amazon’s CFO (Chief Financial Officer). Amazon has a reputation for being reticent to share details, but I thought Olsavsky came across as having a much more casual, less scripted conversation (although, of course, there were still things questions weren’t answered in detail).
You might also expect a CFO to be all about the money, but this quotation from the transcript (in accordance with Seeking Alpha’s quotation policy) is not that:
“There’s now over 12,000 Alexa skills. So we think that’s all foundational. The monetization, as you might call it, is a theme of your questions.
That’s not our primary issue right now. It’s about building great products and delighting customers. We think as engagement – as we pick up engagement with the devices, it helps the engagement with Amazon as a whole. So whether someone is ordering off their Alexa device or whether they’re going to their phone, or going to their computer, it all has the same effect for us.”
When they did talk money, I thought that was good for customers, too. They broke things out differently, including a category for subscriptions services (subsers) like
Kindle Unlimited (at AmazonSmile: benefit a non-profit of your choice by shopping*)
which I think is going to be a strategy people will choose (although there will still be a place for “piece buyers” who buy one book at a time to own).
They mentioned artificial intelligence, but they did not talk about development in virtual/augmented reality…which I could argue is an indicator that my prediction that they become significantly publicly involved in VAMM (Virtual/Augmented/Mixed/Merged) space is likely to come true. I think they want that to be a surprise, to be a big news story…otherwise, why not mention it even a little? If the two choices are that they are not working on it at all, despite all of the growth this year and the industry being in the launch phase, or that they are working on it and don’t want to talk about it yet, I go with the latter. 😉
What do you think? Feel free to tell me and my readers by commenting on this post.
My current Amazon Giveaways:
LAST TWO DAYS TO ENTER
I recently concluded a giveaway for
One Murder More (at AmazonSmile: benefit a non-profit of your choice by shopping*)
by my sibling, Kris Calvin
and there were ten winners. I’m doing a new one for the same book:
1 winner
Requirements for participation:
- Resident of the 50 United States or the District of Columbia
- 18+ years of age (or legal age)
- Follow Kris Calvin on Amazon (you’ll be notified when future books are added to Amazon…I think that’s the only contact you get, although I’m not positive)
Giveaway: https://giveaway.amazon.com/p/c2fb235f3cf97ced
—
Cryptozoology A To Z: The Encyclopedia of Loch Monsters, Sasquatch, Chupacabras, and Other Authentic Mysteries of Nature by Loren Coleman (at AmazonSmile*)
Note: this is the paperback. For some reason, I couldn’t make the Kindle book for this one public (like I could with Kris’ book). I really wanted this one to be public, because the whole goal is to promote Loren Coleman’s medical expense fund GoFundMe campaign. I’ve never met Loren personally, and we have no shared business interests, although we have had some correspondence. I’ve read Loren’s books for decades, and admire how the cryptozoologist/Fortean helps others, including being the Director of the International Cryptozoology Museum in Maine (although in so many smaller ways, too). It’s sad to me that someone who has done so much is having trouble dealing with medical expense (due to multiple operations). That doesn’t stop Loren from going to the Bigfoot festival in Willow Creek, California tomorrow, but for people who have enjoyed and benefited from Loren’s work, the medical expenses fund is an opportunity to do a thank you. Literally over 300 people have entered in about a day, and they’ve all tweeted (as a requirement to entry) a link to the fund’s page. I do not ask people to endorse the fund or to ask other people to contribute (or for them to contribute themselves)…I’m just hoping to raise the profile so people who might want to contribute and don’t know about it get the word.
- Winner:Randomly selected after Giveaway has ended, up to 1 winners.
- Requirements for participation:
- Resident of the 50 United States or the District of Columbia
- 18+ years of age (or legal age)
- Tweet a message
Giveaway: https://giveaway.amazon.com/p/303e4f5c496116a2
Join thousands of readers and try the free ILMK magazine at Flipboard!
All aboard our new The Measured Circle’s Geek Time Trip at The History Project!
* I am linking to the same thing at the regular Amazon site, and at AmazonSmile. When you shop at AmazonSmile, half a percent of your purchase price on eligible items goes to a non-profit you choose. It will feel just like shopping at Amazon: you’ll be using your same account. The one thing for you that is different is that you pick a non-profit the first time you go (which you can change whenever you want)…and the good feeling you’ll get. 
Shop ’til you help!
This post by Bufo Calvin originally appeared in the I Love My Kindle blog. To support this or other blogs/organizations, buy Amazon Gift Cards from a link on the site, then use those to buy your items. There will be no cost to you, and a benefit to them.
I Love My Kindle 
April 29, 2017 at 4:18 pm |
I mentioned a few columns back the possibility of Amazon’s stock price reaching $1,000. Yesterday, it reached an intraday high of $950 before falling back to around $925. A 10% rise (well within past post earnings report rises) will put it over that mark — so barring some draconian externalities, it’s quite possible.
I was reading another article that pointed out that a $10,000 investment in AMZN at the $18 IPO price back in 1997 would be worth $4.8 million today. For those of us of more modest means a $100 investment would be worth $48,000 today. Not too shabby (or shoulda woulda coulda :grin?) for 20 years (for those interested in such things that’s an ROI of 36%).
I too listened to the call, and I found the tone a bit different (probably because for the first time in a while AMZN beat the analysts’ expectations for both revenue and net income).
The parts of the call that I found most interesting were about logistics. AMZN mentioned that the growth of FBA (Fulfilled by Amazon — essentially third part sellers — roughly 40% of Amazon’s revenue) badly stressed their delivery capabilities in 4Q 2015. So in 2016 they dramatically invested in their delivery network — both in distribution centers and sortation centers. While they had the number of new distribution centers to share, they did not have the same number for sortation centers. Sortation centers are organized by zip codes and there are generally multiple sortation centers per DC. From comments made elsewhere, it is my understanding that the majority of final delivery from sortation centers is via USPS..
AMZN did not mention Kiva robots explicitly, but they did mention that they have improved the efficiency of their logistics network through increased used of advanced automation, and that they were several generations down the automation learning curve (six sticks in my mind), and that all future additions to their logistics network would incorporate these automation technologies.
Not mentioned much was their efforts to become an end to end shipper both on the sea, and in the air (they did mention that they have negotiated leases for 40 cargo jets).
My sense is that beyond AWS, Amazon is becoming a dominant logistics provider, and that they may start to sell some of this capability to 3rd parties in competition with FedEx, UPS, DHL, and the like.
May 5, 2017 at 3:02 am |
Thanks for writing, Edward!
I appreciate your insights!
I fully expect Amazon to get to $1,000 this year…and to drop back down and bounce back up and… 😉
It’s interesting to me, because I would think Amazon would make a good recreational stock…but not at that price. I got a share of Disney when I was a kid (I think it was $12 back then), and then they split the stock several times. That’s how you keep the price low, so it can be given as a gift to kids. 🙂 I know you know, but for people who don’t…
Let’s say you want to keep a stock price under $20. It gets to $19, and looks like it is going to go up: what do you do?
You change the price to $9.50, and for every one share somebody had, they now have two. That works great for the stockholder; the next time it goes up $1, instead of earning one dollar, they get two!
That one Disney share helped us do the down payment on our first place to live (a condo, and it wasn’t any where near the down payment…but it was thousands of dollars).
I get why Amazon is good at logistics…we had to be great at it in the bookstore and my other stores, just to deal with all the inventory changes. It’s obviously a very different scale, but I can see how they would have the skill set. They certainly already use AWS (Amazon Web Services) with entirely third parties…but for retail items, they may want to encourage people to sell through their website.