Amazon’s Cloud Is Growing So Fast It’s Scaring Shareholders

Re:Amazon’s Cloud Is Growing So Fast It’s Scaring Shareholders by ekianjo on Sunday July 27, 2014 @10:29PM (#8094812)

> Amazon's persistent lack of profits

This has been addressed several times already. Amazon is effectively making profits on several on its key businesses but is effectively reinvesting most of its profits into new infrastructure, distribution centers and new services. The day Amazon decreases that investment ratio, profits will significantly increase. In other words, Amazon is far from being in the red. They are just massively investing.

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Re:Amazon’s Cloud Is Growing So Fast It’s Scaring Shareholders by int19h on Sunday July 27, 2014 @11:18PM (#8094991)

Some people want to see healthy EPS growth, and as you point out some patient investors are willing to buy the "reinvesting in accelerated growth" thesis.

But everyone is getting tired of AMZN's lack of transparency. Increasingly, buying AMZN is akin to buying the "Bezos is the next Jobs" meme on faith.

http://seekingalpha.com/article/2343265-amazon-com-bezos-ser...

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Re:Amazon’s Cloud Is Growing So Fast It’s Scaring Shareholders by epa on Sunday July 27, 2014 @11:26PM (#8095010)

Investments in capital items are shown on an income statement expensed over the life of the asset. Decreases in investment have no impact on increase in profit (only the opposite is true, increase in investment will add a decrease in profit of 1/n of the cost where n is the life of the asset in years).

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Re:Amazon’s Cloud Is Growing So Fast It’s Scaring Shareholders by rahimnathwani on Monday July 28, 2014 @02:13AM (#8095440)

Decreases in investment have no impact on increase in profit

Yes they do. Imagine I have a business which has steady gross margin of 100 dollars per year, but to keep it going so far I have been investing 50 dollars per year (capex). Assume my capex is depreciated over 5 years. So, in a single year, my profit is 50 dollars:

- 100 dollars gross margin - Less 50 dollars depreciation (1/5th of my last 5 years' capex: 1/5 * (50 * 5))

Now, let's say I decide to decrease investment. My next profit will be 60 dollars:

- 100 dollars gross margin - Less 1/5 * (50*4)

So, by decreasing investment I have increased profit.

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Re:Amazon’s Cloud Is Growing So Fast It’s Scaring Shareholders by epa on Tuesday July 29, 2014 @11:25AM (#8102700)

Yes, technically, but your example is too simplistic and the year by year can fluctuate. But the specific capital items we are talking about today that are not purchased do not contribute to the IS. The effect is just existing capital items making it's way through the statements. We are talking about today, short term.

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Re:Amazon’s Cloud Is Growing So Fast It’s Scaring Shareholders by wmf on Monday July 28, 2014 @01:26AM (#8095335)

Is Amazon capitalizing or expensing their R&D?

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Re:Amazon’s Cloud Is Growing So Fast It’s Scaring Shareholders by epa on Tuesday July 29, 2014 @11:22AM (#8102676)

Good point but this is a separate discussion, R&D must be expensed up to a certain point, so reduction in research would improve the statements..

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