5 ms·

Warren Buffett dumps $900MM in Wal-Mart Stock, end of brick and mortar

36 points by jonwachob91 10y ago

samfisher83 10y ago
I wuld argue a large chunk of amzn market cap is due to aws, Their retail operations just don't make a lot of money.
- garrettgrimsley 10y ago
  Am I reading their earnings report [0] wrong, or do their net sales as a whole not dwarf their AWS sales? What are you basing your argument on? [0] http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9NjU4MjQ1fENoaWxkSUQ9MzY0NTY2fFR5cGU9MQ==&t=1 http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9N...
  - gizmo 10y ago
    AWS has a healthy profit margin, excellent growth prospects, recurring revenue, and significant lock-in. AWS is expected to do 15 billion or so in revenue for 2017. As an independent business it would trade on at least 10 times revenues, so that means AWS comprises 150bn out of the 400bn in market cap.
    - garrettgrimsley 10y ago
      Thanks for the explanation, that is quite a large chunk!
sjg007 10y ago
I think Walmart can turn around online. So can Target.
- vorotato 10y ago
  especially with the acquisition of jet.com
ethagknight 10y ago
No comment in the article on Buffett's decisions to invest in airlines. Maybe things have changed, but I remember Buffett saying in a speech that "every time I get the urge to buy an airline, I call an emergency hotline to talk me down."
- lithos 10y ago
  One of trumps recent promises is to shove billions at airlines to make them competitive to foreign airlines that are subsidized. Bloomburg radio spent 3 days talking about it and pulling in guest speakers.
- deleted 10y ago
  [deleted]
Keverw 10y ago
I still like stores if I'm in a hurry. You can get the product the same day. I don't live in a major city that does same day delivery(That'd be super cool though to have a service like that!). Only thing I hate about brick and mortar is slow checkout, and people aren't really knowledgeable. But it's nice that stores like Walmart are open early. I love going earlier, less people and faster checkout. It feels like somthing straight out of a zombie movie when going to a big store early. It's like that mall movie once they cleared out the zombies, and had the whole mall to themselves. Amazon Go sounds nice, but having people around for assistance would be nice. (But I don't think Amazon Go is going to sell electronics, just food, and stuff so not like your going to ask an employee for help for cooking supplies) I remember CompUSA being one of my favorite computer stores, knowledgeable people, plenty of parts, rebates, etc. Now it seems like most stores just sell the same thing already together, same shoe fits all type of thing. Was disappointed when they went out of business.
- Analemma_ 10y ago
  B&M stores still have use cases, but the question is, after online retail has gobbled up all it can and people only go into a store for one of these edge cases, whether what's left is enough to sustain the fixed overhead of running a business like WalMart. I don't think so, and apparently Buffett doesn't think so either.
  - Keverw 10y ago
    Yeah, I think pretty much once online gobbles up offline retail. There will be better and faster shipping networks, etc. Like having warehouses with products closer to people. But unsure how much they'd really want to invest into smaller cities. Well I'm about an hour away from two major cities... Maybe if automation is used, drones maybe or self driving delivery trucks making multiple stops. Maybe same day shipping would be possible everywhere. Our city recently upgraded their garbage trucks and it looks like it's pretty much all automated other than someone driving it. Used to be like 3 people on a truck, one driving and two other people loading it. We didn't have trash cans and actually just put bags out on the curve. Way behind most cities, but rural farm area. So on the other side of things, less jobs for the garbage man. I guess with automation, you have a handful of people maintaining the machines and the rest of the cost is fuel and just upgrading your fleet. No sick days really unless it breaks down(but maybe faster to swap a part out then heal a human if you keep spares on hand). Or not worrying about them not liking their job and doing poorly at it. Same result every time with automation in theory. But automation is surely the future. Maybe some day basic income and universal income will be a reality as things are more automated. Maybe less cancer will result in automation. I see ads on TV for lawyers advertising to factory workers, people in the military, etc who got cancer while working. Also maybe less people with back or knee problems. So maybe people will be healthier with automation, and lower health care costs. I am all for automation, as long as people are taken care of. Just seems more convenience and people can enjoy life more. Have more freedom. I think will be strange though to have vehicles, robots and drones without any humans operating them to be a bit strange though at first.
norea-armozel 10y ago
I think it's premature to call this an end to brick and mortar. It seems to me that the likelier outcome is a hybridization of online and physical retail outlets. People still want to buy their stuff in person and the cost of shipping is starting to wear on Amazon (fewer things qualify for free shipping and they've increased the minimum amount) which is probably why they're focused on optimizing shipping and adding physical stores to their approach. So the call for everything being online only is going to be proven a fantasy (hell, it already is a fantasy).
__derek__ 10y ago
I don't buy it. For what it's worth, since Buffett first bought WMT shares in 2005, the company has increased its sales revenue by over 50%. That growth is slowing, but the sales aren't going away until someone comes in and wrestles away the monopoly it's built in rural and suburban communities.
nikdaheratik 10y ago
I don't think this is the "end of brick and mortar" which doesn't mean it's a bad idea for Buffett to sell. If you look at the holdings, Walmart doesn't really fit with the rest of the business and isn't likely to grow anymore like it has in the past. Especially, when you consider that they haven't been able to get much of a foothold overseas. So the question then is hold or sell for Buffett. Clearly, he think's it's more likely to stagnate rather than pay a steady dividend and make more cash for the rest of the business, so it's sell. IMO, Walmart's going to have more consolidation ahead and may not make the margins they were, but they're also the only game in town for a large part of America. And they will be until we get better broadband through much of the U.S.

36 points by jonwachob91 10y ago

samfisher83 10y ago

I wuld argue a large chunk of amzn market cap is due to aws, Their retail operations just don't make a lot of money.

garrettgrimsley 10y ago
Am I reading their earnings report [0] wrong, or do their net sales as a whole not dwarf their AWS sales? What are you basing your argument on? [0] http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9NjU4MjQ1fENoaWxkSUQ9MzY0NTY2fFR5cGU9MQ==&t=1 http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9N...
- gizmo 10y ago
  AWS has a healthy profit margin, excellent growth prospects, recurring revenue, and significant lock-in. AWS is expected to do 15 billion or so in revenue for 2017. As an independent business it would trade on at least 10 times revenues, so that means AWS comprises 150bn out of the 400bn in market cap.
  - garrettgrimsley 10y ago
    Thanks for the explanation, that is quite a large chunk!

sjg007 10y ago

I think Walmart can turn around online. So can Target.

vorotato 10y ago
especially with the acquisition of jet.com

ethagknight 10y ago

No comment in the article on Buffett's decisions to invest in airlines. Maybe things have changed, but I remember Buffett saying in a speech that "every time I get the urge to buy an airline, I call an emergency hotline to talk me down."

lithos 10y ago
One of trumps recent promises is to shove billions at airlines to make them competitive to foreign airlines that are subsidized. Bloomburg radio spent 3 days talking about it and pulling in guest speakers.
deleted 10y ago
[deleted]

Keverw 10y ago

I still like stores if I'm in a hurry. You can get the product the same day. I don't live in a major city that does same day delivery(That'd be super cool though to have a service like that!). Only thing I hate about brick and mortar is slow checkout, and people aren't really knowledgeable. But it's nice that stores like Walmart are open early. I love going earlier, less people and faster checkout. It feels like somthing straight out of a zombie movie when going to a big store early. It's like that mall movie once they cleared out the zombies, and had the whole mall to themselves. Amazon Go sounds nice, but having people around for assistance would be nice. (But I don't think Amazon Go is going to sell electronics, just food, and stuff so not like your going to ask an employee for help for cooking supplies) I remember CompUSA being one of my favorite computer stores, knowledgeable people, plenty of parts, rebates, etc. Now it seems like most stores just sell the same thing already together, same shoe fits all type of thing. Was disappointed when they went out of business.

Analemma_ 10y ago
B&M stores still have use cases, but the question is, after online retail has gobbled up all it can and people only go into a store for one of these edge cases, whether what's left is enough to sustain the fixed overhead of running a business like WalMart. I don't think so, and apparently Buffett doesn't think so either.
- Keverw 10y ago
  Yeah, I think pretty much once online gobbles up offline retail. There will be better and faster shipping networks, etc. Like having warehouses with products closer to people. But unsure how much they'd really want to invest into smaller cities. Well I'm about an hour away from two major cities... Maybe if automation is used, drones maybe or self driving delivery trucks making multiple stops. Maybe same day shipping would be possible everywhere. Our city recently upgraded their garbage trucks and it looks like it's pretty much all automated other than someone driving it. Used to be like 3 people on a truck, one driving and two other people loading it. We didn't have trash cans and actually just put bags out on the curve. Way behind most cities, but rural farm area. So on the other side of things, less jobs for the garbage man. I guess with automation, you have a handful of people maintaining the machines and the rest of the cost is fuel and just upgrading your fleet. No sick days really unless it breaks down(but maybe faster to swap a part out then heal a human if you keep spares on hand). Or not worrying about them not liking their job and doing poorly at it. Same result every time with automation in theory. But automation is surely the future. Maybe some day basic income and universal income will be a reality as things are more automated. Maybe less cancer will result in automation. I see ads on TV for lawyers advertising to factory workers, people in the military, etc who got cancer while working. Also maybe less people with back or knee problems. So maybe people will be healthier with automation, and lower health care costs. I am all for automation, as long as people are taken care of. Just seems more convenience and people can enjoy life more. Have more freedom. I think will be strange though to have vehicles, robots and drones without any humans operating them to be a bit strange though at first.

norea-armozel 10y ago

I think it's premature to call this an end to brick and mortar. It seems to me that the likelier outcome is a hybridization of online and physical retail outlets. People still want to buy their stuff in person and the cost of shipping is starting to wear on Amazon (fewer things qualify for free shipping and they've increased the minimum amount) which is probably why they're focused on optimizing shipping and adding physical stores to their approach. So the call for everything being online only is going to be proven a fantasy (hell, it already is a fantasy).

__derek__ 10y ago

I don't buy it. For what it's worth, since Buffett first bought WMT shares in 2005, the company has increased its sales revenue by over 50%. That growth is slowing, but the sales aren't going away until someone comes in and wrestles away the monopoly it's built in rural and suburban communities.

nikdaheratik 10y ago

I don't think this is the "end of brick and mortar" which doesn't mean it's a bad idea for Buffett to sell. If you look at the holdings, Walmart doesn't really fit with the rest of the business and isn't likely to grow anymore like it has in the past. Especially, when you consider that they haven't been able to get much of a foothold overseas. So the question then is hold or sell for Buffett. Clearly, he think's it's more likely to stagnate rather than pay a steady dividend and make more cash for the rest of the business, so it's sell. IMO, Walmart's going to have more consolidation ahead and may not make the margins they were, but they're also the only game in town for a large part of America. And they will be until we get better broadband through much of the U.S.