8 ms·

Amazon soars after earnings beat

110 points by jbredeche 7y ago

neosat 7y ago
Net sales ~$280B (products and services) Net Operating expenses ~$266B Operating income ~$14.5B on that huge amazon.com revenue. AWS is an amazing business itself but it's easy to underestimate what a massive strategic advantage it is for amazon - compared to other retailers - to have it in their portfolio! [edited M to B - thanks for catching that :)]
- dickjocke 7y ago
  Wow those margins are shockingly thin. I guess the logistics of increasingly approaching 1 day shipping are no joke.
  - meritt 7y ago
    > Wow those margins are shockingly thin That's by design. Amazon has found it's far more effective to deploy their excess capital toward company expenditures in the form of acquisitions, real estate, capex, employees, stock buybacks, etc rather than letting it get taxed as corporate operating income. Those dollars do ultimately get taxed, to be clear, but in the form of employment taxes, individual capital gains, individual income taxes, and property taxes.
    - pavlov 7y ago
      Isn’t this an argument for raising the corporate income tax? It would motivate more companies to invest like Amazon.
      - tryptophan 7y ago
        No, because not every company can invest like Amazon. edit: Take for example McDonalds. What are they supposed to invest in? Its a mature business at this point, and over-investment in random things would just destroy shareholder value.
        pavlov 7y ago
        Maybe those companies deserve to be beaten by new ones that know how to invest in growth?
    - gordon_freeman 7y ago
      I always wonder why Apple does not utilize its revenue and profits the way Amazon does by funneling it towards CapEx and ever grow more ambitiously with its acquisitions and new products and services. I have seen Apple keep buying back its own stock and giving ever more dividends to its shareholders rather than investing in itself.
      - xxpor 7y ago
        I think it's just because they're out of ideas, or not confident in what they think up. I just get the sense they're not as willing to fail.
        pmart123 7y ago
        I get the feeling that large acquisitions wouldn’t help Apple given its culture and emphasis on tight integration. Also, it’s R&D budget on an absolute level is pretty large.
      - toohotatopic 7y ago
        More growth ultimately will require another management layer. Maybe that's a risk not worth taking?
    - kgwgk 7y ago
      Acquisitions and buybacks are done with after-tax money. (Capex as well, in fact, but depreciation reduces future profits and taxes.)
      - csdreamer7 7y ago
        Buybacks yes. Acquisitions depend on what is being acquired. Goodwill can be depreciated.
        kgwgk 7y ago
        Goodwill is not amortized in GAAP accounting for public companies (it can be impaired, but that’s bad). But you’re right, I had forgotten that it may be amortized for tax purposes when it comes from a taxable asset sale (not for an stock-based acquisition).
- carlsborg 7y ago
  B not M
  - neosat 7y ago
    corrected - thanks !
y-c-o-m-b 7y ago
As they cannibalize or threaten small businesses[1], treat their employees poorly[2][3], and encourage/allow Chinese counterfeit products[4][5]. [1] https://www.washingtonpost.com/technology/2020/01/16/popsockets-sonos-tile-congress-antitrust-hearing https://www.washingtonpost.com/technology/2020/01/16/popsock... [2] https://www.businessinsider.com/amazon-employees-describe-peak-2019-2 https://www.businessinsider.com/amazon-employees-describe-pe... [3] https://www.theguardian.com/technology/2019/apr/02/revealed-amazon-employees-suffer-after-workplace-injuries https://www.theguardian.com/technology/2019/apr/02/revealed-... [4] https://www.washingtonpost.com/technology/2019/11/14/how-amazons-quest-more-cheaper-products-has-resulted-flea-market-fakes/?arc404=true https://www.washingtonpost.com/technology/2019/11/14/how-ama... [5] https://www.theatlantic.com/technology/archive/2018/04/amazon-may-have-a-counterfeit-problem/558482/ https://www.theatlantic.com/technology/archive/2018/04/amazo...
- geertj 7y ago
  Amazon employee here (product manager at AWS). I don't recognize this characterization of our company. The company treats me just fine. While the pace is high, and the bar for anything you do is very high, you learn a lot, get tons of opportunity to invent new stuff, and generally can make meaningful contributions to services, while still having a personal life.
- abledon 7y ago
  are the SDE's also pulling crazy hours?
  - notimetorelax 7y ago
    AFAIK yes. For AMZN deadline is everything, no one cares how you get there.
    - mathgladiator 7y ago
      It depends on the team since some are more mature and focus on stability. It means the teams dont have much room for promotions, but good work life.
rustjava 7y ago
3.3 b earnings in a quarter. Most of which is from cloud I believe? They don't break down. Shopping- Walmart is catching up (but will probably not beat. It's a lossy business for Amazon I believe and as people realize the counterfeit problem the business goes down ) Cloud- MS will beat them in 3 years (which doesn't mean they will lose customers but growth will slow down ) Other areas they have tough competition. I'm beginning to wonder if it's a stock bought by faithful.
- xur17 7y ago
  > Cloud- MS will beat them in 3 years (which doesn't mean they will lose customers but growth will slow down ) Is this actually true? I thought MS bundled a bunch of "office 365" stuff in with "cloud" to boost their numbers.
  - rustjava 7y ago
    Debunked earlier by an MS employee, no less, on HN itself
    - xur17 7y ago
      Can you link to that please?
      - adventured 7y ago
        It wasn't debunked, what you said was correct. Microsoft does not break out Azure's sales or operating income numbers, it's all reported together with the other cloud products. All they reveal each quarter is Azure's growth rate.
        jyrkesh 7y ago
        Actually, they used to bundle O365 and Azure numbers together, but it's been broken out for at least a year or two: https://www.microsoft.com/en-us/Investor/earnings/FY-2020-Q1/press-release-webcast https://www.microsoft.com/en-us/Investor/earnings/FY-2020-Q1...
deleted 7y ago
[deleted]
ebg13 7y ago
So they're about back to where they were in 2018.
40acres 7y ago
Unless I'm reading this wrong AWS generated 47% of Facebook's total 2019 revenue in Q4.
- lonelappde 7y ago
  The value of that fact depends on how the margin compares. Half (I made that number up) of AWS revenue is passthrough to hardware vendors.
shreyshrey 7y ago
Interesting tidbits: - 150 million amazon prime users globally (equivalent to to combined france + germany population (or) half of US population). Impressive!! - Rivian is integrating Alexa into its electric vehicle lineup, including its upcoming fleet of 100,000 all-electric Amazon delivery van. Amazon has made investments in Rivian. Going to compete with Tesla? - Amazon Music has more than 55 million customers worldwide. Collectively, in the U.S., U.K., Germany, and Japan, Amazon Music customers have grown nearly 50% year-over-year; - Prime Video received eight Golden Globe Award nominations, with Fleabag winning Best Television Series, Musical or Comedy, as well as Best Performance by an Actress in a Television Series, Musical or Comedy, for Phoebe WallerBridge. - AWS announced three Arm-based instances (M6g, C6g, R6g) powered by AWS’s new Graviton2 processors, that deliver up to 40% better price and performance than current x86 processor-based instances. Threat to intel? - AWS announced the general availability of AWS Outposts, a fully-managed service that extends AWS infrastructure and services to virtually any data center, co-location space, or on-premises facility. On-premises is gaining strength? https://ir.aboutamazon.com/static-files/f3589a21-d023-4e4c-9897-1498c60885d2 https://ir.aboutamazon.com/static-files/f3589a21-d023-4e4c-9...
- StreamBright 7y ago
  I wish they introduced ARM based laptops with the recent developments of Graviton.
  - Uehreka 7y ago
    My other comment ITT is touting the awesome library compatibility I’ve experienced on ARM, but the problem I see with ARM laptops is that I haven’t seen tons and tons of consumer desktop/laptop apps compiling for ARM (with the sort-of exception of Android apps, many of which rely on Google Play Services). Getting ARM laptops to work is going to require OS-level changes. If Amazon shipped one now, they’d either need to ship a fork of a linux desktop OS with good app compatibility or wait for MS to crack the ARM walnut with one of their ARM compatibility projects. I feel pretty confident that this is a “hardware follows software” situation: laptop manufacturers may be tempted to make ARM laptops right now, but I think they’re probably waiting for MS to ship a version of “Windows for ARM” that is generally seen to be successful.
tempsy 7y ago
A single $2000 strike call option expiring tomorrow was trading at $250 just before close. If Amazon closes at $2100 tomorrow that option will be worth $10,000. Amazing.
- Traster 7y ago
  There are always massively out of the money options expiring soon that are worthless and would skyrocket if the company suddenly became much more valuable. They're not valued highly because that very rarely happens, no matter what the guys at /r/wallstreetbets tell you.
  - tempsy 7y ago
    This is actually noteworthy because the $2k strike was by far the most heavily traded call option today...not even close, so this wasn't an extremely random dumb lotto bet made by 2 people on /r/wsb
    - gretch 7y ago
      It was heavily traded but there was an equal amount written/sold as bought. Were the writers/sellers lacking of foresight? Were buyers prescient? Was everyone gambling?
      - tempsy 7y ago
        I’m not sure what your point is. Sellers obviously think the credit they earn is worth the risk. Buyers think the price they pay is worth it too. It’s just a two-sided marketplace like many other things. Options writers can and should hedge losses by not writing naked calls (highly risky in situations exactly like this) and instead buy a higher strike option which caps losses e.g. a vertical spread.
        gretch 7y ago
        You said the option/strike in question was not a dumb lotto bet and you submitted the volume of trading as your supporting evidence. But the state lottery is literally a dumb lotto bet with super high volume. So I don’t see how this wasn’t some set of lucky gamblers. If ER went another way, there’d be some other group making lots of money. Everyone speculating about the future (which is fine depending on the financial circumstances of involved individuals)
carlsborg 7y ago
AWS Record Quarter at $9.95 Billion revenue, up 34% year on year. Operating income from AWS also up 19% to ~$2.6B
vernie 7y ago
So don't expect any of your pet Amazon complaints to change any time soon.

110 points by jbredeche 7y ago

Net sales ~$280B (products and services) Net Operating expenses ~$266B Operating income ~$14.5B on that huge amazon.com revenue. AWS is an amazing business itself but it's easy to underestimate what a massive strategic advantage it is for amazon - compared to other retailers - to have it in their portfolio! [edited M to B - thanks for catching that :)]

dickjocke 7y ago
Wow those margins are shockingly thin. I guess the logistics of increasingly approaching 1 day shipping are no joke.
- meritt 7y ago
  > Wow those margins are shockingly thin That's by design. Amazon has found it's far more effective to deploy their excess capital toward company expenditures in the form of acquisitions, real estate, capex, employees, stock buybacks, etc rather than letting it get taxed as corporate operating income. Those dollars do ultimately get taxed, to be clear, but in the form of employment taxes, individual capital gains, individual income taxes, and property taxes.
  - pavlov 7y ago
    Isn’t this an argument for raising the corporate income tax? It would motivate more companies to invest like Amazon.
    - tryptophan 7y ago
      No, because not every company can invest like Amazon. edit: Take for example McDonalds. What are they supposed to invest in? Its a mature business at this point, and over-investment in random things would just destroy shareholder value.
      - pavlov 7y ago
        Maybe those companies deserve to be beaten by new ones that know how to invest in growth?
  - gordon_freeman 7y ago
    I always wonder why Apple does not utilize its revenue and profits the way Amazon does by funneling it towards CapEx and ever grow more ambitiously with its acquisitions and new products and services. I have seen Apple keep buying back its own stock and giving ever more dividends to its shareholders rather than investing in itself.
    - xxpor 7y ago
      I think it's just because they're out of ideas, or not confident in what they think up. I just get the sense they're not as willing to fail.
      - pmart123 7y ago
        I get the feeling that large acquisitions wouldn’t help Apple given its culture and emphasis on tight integration. Also, it’s R&D budget on an absolute level is pretty large.
    - toohotatopic 7y ago
      More growth ultimately will require another management layer. Maybe that's a risk not worth taking?
  - kgwgk 7y ago
    Acquisitions and buybacks are done with after-tax money. (Capex as well, in fact, but depreciation reduces future profits and taxes.)
    - csdreamer7 7y ago
      Buybacks yes. Acquisitions depend on what is being acquired. Goodwill can be depreciated.
      - kgwgk 7y ago
        Goodwill is not amortized in GAAP accounting for public companies (it can be impaired, but that’s bad). But you’re right, I had forgotten that it may be amortized for tax purposes when it comes from a taxable asset sale (not for an stock-based acquisition).
carlsborg 7y ago
B not M
- neosat 7y ago
  corrected - thanks !

y-c-o-m-b 7y ago

As they cannibalize or threaten small businesses[1], treat their employees poorly[2][3], and encourage/allow Chinese counterfeit products[4][5]. [1] https://www.washingtonpost.com/technology/2020/01/16/popsockets-sonos-tile-congress-antitrust-hearing https://www.washingtonpost.com/technology/2020/01/16/popsock... [2] https://www.businessinsider.com/amazon-employees-describe-peak-2019-2 https://www.businessinsider.com/amazon-employees-describe-pe... [3] https://www.theguardian.com/technology/2019/apr/02/revealed-amazon-employees-suffer-after-workplace-injuries https://www.theguardian.com/technology/2019/apr/02/revealed-... [4] https://www.washingtonpost.com/technology/2019/11/14/how-amazons-quest-more-cheaper-products-has-resulted-flea-market-fakes/?arc404=true https://www.washingtonpost.com/technology/2019/11/14/how-ama... [5] https://www.theatlantic.com/technology/archive/2018/04/amazon-may-have-a-counterfeit-problem/558482/ https://www.theatlantic.com/technology/archive/2018/04/amazo...

geertj 7y ago
Amazon employee here (product manager at AWS). I don't recognize this characterization of our company. The company treats me just fine. While the pace is high, and the bar for anything you do is very high, you learn a lot, get tons of opportunity to invent new stuff, and generally can make meaningful contributions to services, while still having a personal life.
abledon 7y ago
are the SDE's also pulling crazy hours?
- notimetorelax 7y ago
  AFAIK yes. For AMZN deadline is everything, no one cares how you get there.
  - mathgladiator 7y ago
    It depends on the team since some are more mature and focus on stability. It means the teams dont have much room for promotions, but good work life.

rustjava 7y ago

3.3 b earnings in a quarter. Most of which is from cloud I believe? They don't break down. Shopping- Walmart is catching up (but will probably not beat. It's a lossy business for Amazon I believe and as people realize the counterfeit problem the business goes down ) Cloud- MS will beat them in 3 years (which doesn't mean they will lose customers but growth will slow down ) Other areas they have tough competition. I'm beginning to wonder if it's a stock bought by faithful.

xur17 7y ago
> Cloud- MS will beat them in 3 years (which doesn't mean they will lose customers but growth will slow down ) Is this actually true? I thought MS bundled a bunch of "office 365" stuff in with "cloud" to boost their numbers.
- rustjava 7y ago
  Debunked earlier by an MS employee, no less, on HN itself
  - xur17 7y ago
    Can you link to that please?
    - adventured 7y ago
      It wasn't debunked, what you said was correct. Microsoft does not break out Azure's sales or operating income numbers, it's all reported together with the other cloud products. All they reveal each quarter is Azure's growth rate.
      - jyrkesh 7y ago
        Actually, they used to bundle O365 and Azure numbers together, but it's been broken out for at least a year or two: https://www.microsoft.com/en-us/Investor/earnings/FY-2020-Q1/press-release-webcast https://www.microsoft.com/en-us/Investor/earnings/FY-2020-Q1...

deleted 7y ago

[deleted]

ebg13 7y ago

So they're about back to where they were in 2018.

40acres 7y ago

Unless I'm reading this wrong AWS generated 47% of Facebook's total 2019 revenue in Q4.

lonelappde 7y ago
The value of that fact depends on how the margin compares. Half (I made that number up) of AWS revenue is passthrough to hardware vendors.

shreyshrey 7y ago

Interesting tidbits: - 150 million amazon prime users globally (equivalent to to combined france + germany population (or) half of US population). Impressive!! - Rivian is integrating Alexa into its electric vehicle lineup, including its upcoming fleet of 100,000 all-electric Amazon delivery van. Amazon has made investments in Rivian. Going to compete with Tesla? - Amazon Music has more than 55 million customers worldwide. Collectively, in the U.S., U.K., Germany, and Japan, Amazon Music customers have grown nearly 50% year-over-year; - Prime Video received eight Golden Globe Award nominations, with Fleabag winning Best Television Series, Musical or Comedy, as well as Best Performance by an Actress in a Television Series, Musical or Comedy, for Phoebe WallerBridge. - AWS announced three Arm-based instances (M6g, C6g, R6g) powered by AWS’s new Graviton2 processors, that deliver up to 40% better price and performance than current x86 processor-based instances. Threat to intel? - AWS announced the general availability of AWS Outposts, a fully-managed service that extends AWS infrastructure and services to virtually any data center, co-location space, or on-premises facility. On-premises is gaining strength? https://ir.aboutamazon.com/static-files/f3589a21-d023-4e4c-9897-1498c60885d2 https://ir.aboutamazon.com/static-files/f3589a21-d023-4e4c-9...

StreamBright 7y ago
I wish they introduced ARM based laptops with the recent developments of Graviton.
- Uehreka 7y ago
  My other comment ITT is touting the awesome library compatibility I’ve experienced on ARM, but the problem I see with ARM laptops is that I haven’t seen tons and tons of consumer desktop/laptop apps compiling for ARM (with the sort-of exception of Android apps, many of which rely on Google Play Services). Getting ARM laptops to work is going to require OS-level changes. If Amazon shipped one now, they’d either need to ship a fork of a linux desktop OS with good app compatibility or wait for MS to crack the ARM walnut with one of their ARM compatibility projects. I feel pretty confident that this is a “hardware follows software” situation: laptop manufacturers may be tempted to make ARM laptops right now, but I think they’re probably waiting for MS to ship a version of “Windows for ARM” that is generally seen to be successful.

tempsy 7y ago

A single $2000 strike call option expiring tomorrow was trading at $250 just before close. If Amazon closes at $2100 tomorrow that option will be worth $10,000. Amazing.

Traster 7y ago
There are always massively out of the money options expiring soon that are worthless and would skyrocket if the company suddenly became much more valuable. They're not valued highly because that very rarely happens, no matter what the guys at /r/wallstreetbets tell you.
- tempsy 7y ago
  This is actually noteworthy because the $2k strike was by far the most heavily traded call option today...not even close, so this wasn't an extremely random dumb lotto bet made by 2 people on /r/wsb
  - gretch 7y ago
    It was heavily traded but there was an equal amount written/sold as bought. Were the writers/sellers lacking of foresight? Were buyers prescient? Was everyone gambling?
    - tempsy 7y ago
      I’m not sure what your point is. Sellers obviously think the credit they earn is worth the risk. Buyers think the price they pay is worth it too. It’s just a two-sided marketplace like many other things. Options writers can and should hedge losses by not writing naked calls (highly risky in situations exactly like this) and instead buy a higher strike option which caps losses e.g. a vertical spread.
      - gretch 7y ago
        You said the option/strike in question was not a dumb lotto bet and you submitted the volume of trading as your supporting evidence. But the state lottery is literally a dumb lotto bet with super high volume. So I don’t see how this wasn’t some set of lucky gamblers. If ER went another way, there’d be some other group making lots of money. Everyone speculating about the future (which is fine depending on the financial circumstances of involved individuals)

carlsborg 7y ago

AWS Record Quarter at $9.95 Billion revenue, up 34% year on year. Operating income from AWS also up 19% to ~$2.6B

vernie 7y ago

So don't expect any of your pet Amazon complaints to change any time soon.