Apple made more profit in three months than Amazon has generated in its lifetime

Re:Apple made more profit in three months than Amazon has ge... by tim333 on Saturday May 12, 2018 @12:49AM (#17052528)

There's a difference between the start of the dictionary definition of profit

a) noun 1. a financial gain

and

b) GAAP profits

Amazon has made loads of a) and not much b). Perhaps not coincidentally b) are what you are taxed on.

The financial gains made by shareholders in each over the last 5 years as reflected in increase in market cap are about the same for both - $626bn for apple, $648bn for amzn.

For those not into accounting, roughly how it works is if your basic sales are $10bn, costs $8bn then you can put the $2bn in the bank (apple) or spend and expense it on stuff that will increase market share (amazon).

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Re:Apple made more profit in three months than Amazon has ge... by sosborn on Saturday May 12, 2018 @01:08AM (#17052580)

Apple doesn’t spend to increase market share. It spends to increase profit. People have a hard time understanding this.

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Re:Apple made more profit in three months than Amazon has ge... by kgwgk on Saturday May 12, 2018 @03:04AM (#17052870)

If you spend those $2bn in tangible (and in some cases intangible) stuff that is added to the balance sheet, you will still have $2bn of GAAP profit (and will be taxed on it).

There are many ways to compare AAPL and AMZN. Another angle: one is trading at 5 times book value and the other at 25 times book value.

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Re:Apple made more profit in three months than Amazon has ge... by tim333 on Saturday May 12, 2018 @07:23AM (#17053535)

Yeah the trick is to spend the $2bn in ways which are expensed rather than added to the balance sheet such as marketing, price promotions and so on.

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Re:Apple made more profit in three months than Amazon has ge... by kgwgk on Saturday May 12, 2018 @09:29AM (#17053966)

In you do “price promotions”, the sales are $8bn and the costs are $8bn. If you overspend on marketing your sales are $10bn and your costs are $10bn. It’s true that in those cases the profit is zero, so you won’t pay taxes. But it’s not obvious that this market share gain will result in much higher profits in the future. The trick is not guaranteed to work as intended.

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Re:Apple made more profit in three months than Amazon has ge... by KKKKkkkk1 on Saturday May 12, 2018 @04:03AM (#17052997)

Money spent on building new services and infrastructure is not profit, it's expense. By either GAAP or dictionary definitions.

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Re:Apple made more profit in three months than Amazon has ge... by kgwgk on Saturday May 12, 2018 @05:19AM (#17053193)

I’m not sure if that’s what you’re tring to say, but in the case of Amazon the money being spent in building infrastructure is the profit. The (after tax) profit from yesterday is spent on capital assets today to increase profit in the future (and depreciation of these assets will be deducted from future profits).

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Re:Apple made more profit in three months than Amazon has ge... by kgwgk on Saturday May 12, 2018 @06:59AM (#17053461)

Or more precisely, the profit is part of the money being spent on capital assets. Because they spend much more: the $10bn non-cash charge from depreciation (but that’s “maintenance” capex), the $4bn they “save” by paying employees with stock (essentially a capital raise), they also raise debt ($17bn last year, mostly to acquire Whole Foods) and many assets are not purchased but leased.

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