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Google works on tons of different products but their only real business is the ad business and it is hugely profitable and has been so for a very long time. I h

by dkrich 9y ago

Google works on tons of different products but their only real business is the ad business and it is hugely profitable and has been so for a very long time. I have no doubt about Google's ability to make large profits because they've demonstrated that they can do so. People keep saying Amazon can make similar profits whenever they want but I see zero proof that that is true. AWS isn't a cash cow. It hasn't been proven to be a hugely profitable business yet. It makes a decent amount of money but at this point it's peanuts compared to the valuation. That said, I see a lot more long term potential in the AWS business than the ecommerce business but AWS has to grow by leaps and bounds to justify the current valuation.

justicezyx 9y ago
> AWS isn't a cash cow. Wow... I thought HN does not have people who would make such statement. Did you see the quarterly report?... That's a 14B business on a 23.5% profit margin, and still under relentless price cutting, and are gaining market everyday from traditional IT service company... > it's peanuts compared to the valuation. I dont know what to say. It's started in 2006, and now is 14B. If this says anything, this just shows how strong Amazon's business is! AWS alone is worth 100B market cap, and it's just a peanut to Amazon. I am not sure you are downplaying Amazon's success, or just trying to point out how impressive they really are. [1] http://www.businessinsider.com/amazons-q1-2016-cloud-business-2016-4 http://www.businessinsider.com/amazons-q1-2016-cloud-busines...
- dkrich 9y ago
  How do you get to a 100B valuation? They are set to earn just over 2B this year. So you're willing to pay 50x earnings? Remember, this is IT, where margins should be some of the highest of any industry. Compared to software or traditional hardware companies, a 23% margin isn't very good. I actually buy into the idea that they are reinvesting in expansion which is hurting their profits, but I think it remains to be seen how profitable cloud computing actually is in the long run. It carries enormous expenses in hardware and maintenance and is becoming more competitive every day. Will AWS grow? No doubt. But by how much and at what profit level remains to be seen. If AWS was spun out as its own stock symbol separate from the ecommerce side of the house, I might even be willing to take a flier if I really felt like gambling, but at an overall valuation of $430B, it's just too expensive for me.

by dkrich 9y ago

justicezyx 9y ago

> AWS isn't a cash cow. Wow... I thought HN does not have people who would make such statement. Did you see the quarterly report?... That's a 14B business on a 23.5% profit margin, and still under relentless price cutting, and are gaining market everyday from traditional IT service company... > it's peanuts compared to the valuation. I dont know what to say. It's started in 2006, and now is 14B. If this says anything, this just shows how strong Amazon's business is! AWS alone is worth 100B market cap, and it's just a peanut to Amazon. I am not sure you are downplaying Amazon's success, or just trying to point out how impressive they really are. [1] http://www.businessinsider.com/amazons-q1-2016-cloud-business-2016-4 http://www.businessinsider.com/amazons-q1-2016-cloud-busines...

dkrich 9y ago
How do you get to a 100B valuation? They are set to earn just over 2B this year. So you're willing to pay 50x earnings? Remember, this is IT, where margins should be some of the highest of any industry. Compared to software or traditional hardware companies, a 23% margin isn't very good. I actually buy into the idea that they are reinvesting in expansion which is hurting their profits, but I think it remains to be seen how profitable cloud computing actually is in the long run. It carries enormous expenses in hardware and maintenance and is becoming more competitive every day. Will AWS grow? No doubt. But by how much and at what profit level remains to be seen. If AWS was spun out as its own stock symbol separate from the ecommerce side of the house, I might even be willing to take a flier if I really felt like gambling, but at an overall valuation of $430B, it's just too expensive for me.