3 ms·

Think about it this way. Profits are dollars that leave the company. By sitting on low profits, Amazon turns all its cash towards itself.

dangrossman 13y ago
That's the opposite of what those words mean. Profits are dollars that stay with the company. Dollars that leave the company are expenses, some other company's profits. I don't find redefining profit to mean its opposite enlightening here. They're spending cash now in hopes of future profits -- that seems clear enough in plain english.
- quaunaut 13y ago
  Money not spent is money that isn't working for you, but instead is just sitting in reserve, at best accruing interest. Amazon is betting it can get a much higher return, and so far, has been right.
  - deleted 13y ago
    [deleted]
  - epa 13y ago
    "profit" and "money" are two very different things. "profit" is how much you are making at the end of the year, this is to be reinvested if you are efficient (as you suggest is good, i agree) "money" is the what is sitting in the bank, not being utilized. Would you say that a company who is breaking even is utilizing their cash properly? no, they don't have any cash to utilize, therefore profit and cash are different things.
    - quaunaut 13y ago
      ...or they could have just already utilized the cash, which is what Amazon is doing?
      - epa 13y ago
        Capital assets are not fully expensed in the year they are bought.
- ImprovedSilence 13y ago
  Right, but presumably, the company that spends all it's cash gets something in return for all this money, ideally of equal or greater value to said company than cash spent. Management (jeff and co) elect to spend cash on bettering the position of the company, (and thus keeping the wealth within the company) opposed to just sending money to the owners (spreading the wealth to stock holders/entities external to the company)
- graeme 13y ago
  A certain portion of profits will leave the company as taxes. Investing the money now means that amazon gets to use 100% of those dollars.
  - epa 13y ago
    net income != taxable income
yetanotherphd 13y ago
No, dividends are dollars that leave the company. Profits are an accounting measure of how much the value of the company increased. Since these accounting measures don't try to fully measure future income, heavy investment will appear unprofitable in accounting statements.

dangrossman 13y ago

That's the opposite of what those words mean. Profits are dollars that stay with the company. Dollars that leave the company are expenses, some other company's profits. I don't find redefining profit to mean its opposite enlightening here. They're spending cash now in hopes of future profits -- that seems clear enough in plain english.

quaunaut 13y ago
Money not spent is money that isn't working for you, but instead is just sitting in reserve, at best accruing interest. Amazon is betting it can get a much higher return, and so far, has been right.
- deleted 13y ago
  [deleted]
- epa 13y ago
  "profit" and "money" are two very different things. "profit" is how much you are making at the end of the year, this is to be reinvested if you are efficient (as you suggest is good, i agree) "money" is the what is sitting in the bank, not being utilized. Would you say that a company who is breaking even is utilizing their cash properly? no, they don't have any cash to utilize, therefore profit and cash are different things.
  - quaunaut 13y ago
    ...or they could have just already utilized the cash, which is what Amazon is doing?
    - epa 13y ago
      Capital assets are not fully expensed in the year they are bought.
ImprovedSilence 13y ago
Right, but presumably, the company that spends all it's cash gets something in return for all this money, ideally of equal or greater value to said company than cash spent. Management (jeff and co) elect to spend cash on bettering the position of the company, (and thus keeping the wealth within the company) opposed to just sending money to the owners (spreading the wealth to stock holders/entities external to the company)
graeme 13y ago
A certain portion of profits will leave the company as taxes. Investing the money now means that amazon gets to use 100% of those dollars.
- epa 13y ago
  net income != taxable income

yetanotherphd 13y ago

No, dividends are dollars that leave the company. Profits are an accounting measure of how much the value of the company increased. Since these accounting measures don't try to fully measure future income, heavy investment will appear unprofitable in accounting statements.