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Amazon Is Finally Profitable, Earns $2.5 Billion Over the Last Three Months (cnn.com)
An anonymous reader quotes CNN:
Amazon topped $2 billion in quarterly profit for the first time in its history, an impressive run fueled by continued growth in Prime subscriptions, cloud computing and its nascent advertising business. Amazon said Thursday that it earned $2.5 billion in profit for the three months ending in June, a staggering jump from the $197 million it posted in the same period last year. It marked the third consecutive quarter that Amazon has topped $1 billion in profit, a remarkable feat for a company once known for investing so much in its business that it often lost money. "The profitability trajectory appears to be accelerating quicker than expected," Daniel Ives, an analyst with GBH Insights, wrote in an investor note Thursday. Ives called this a "potential game changer" as Amazon continues to invest heavily in fulfillment centers, new stores and pricey content deals....
Earlier this month, Amazon's market value topped $900 billion for the first time, putting it on the cusp of eclipsing Apple as the world's most valuable company.
Amazon's cloud computing business, Amazon Web Services, had $6 billion in sales, while Amazon's $119-a-year "Prime" service for faster shipping now has more than 100 million users.
Qwartz says the results -- which are over 12 times more than Amazon earned in the same quarter a year ago -- prove that Amazon "can make loads of money when it actually feels like it."
Earlier this month, Amazon's market value topped $900 billion for the first time, putting it on the cusp of eclipsing Apple as the world's most valuable company.
Amazon's cloud computing business, Amazon Web Services, had $6 billion in sales, while Amazon's $119-a-year "Prime" service for faster shipping now has more than 100 million users.
Qwartz says the results -- which are over 12 times more than Amazon earned in the same quarter a year ago -- prove that Amazon "can make loads of money when it actually feels like it."
If employees wanted to share in Amazon profit increases, then they should have used some of their wages to purchase shares of Amazon stock. And No... (1) Amazon can't afford to do that: At least not for a significant portion of Amazon employees (Managers and those responsible for profit can be rewarded). At least not until Amazon automates their business and massively reduces the number of required employees (then the remaining employees can be paid more). And (2) Business doesn't work that way. One of the largest expenses for a retailer is employee costs, and any profitable company is absolutely required to minimize employee costs along the supply channel of goods from source to customer as much as possible.
For example: Amazon has approximately 560,000 employees. If Amazon increased its employee costs by $4000/Year/Employee, that would be a $2.24 Billion dollars/Year cost, thus completely erasing their profit --- Erasing even a NOTICEABLE portion of the revenue/profit would be fiscally irresponsible.
Keep in mind that each Dollar paid to an employee for wages is MORE than $1 in employee costs -- due to things such as Unemployment insurance,15% Employer Match for Social Security and Medicare. and employer match for 401K benefits, health insurance, etc.
They have a better business model.
The lowest costs of labor are slavery and/or indentured servitude. As a society weâ(TM)ve decided those arenâ(TM)t fair and made laws to stop them.
If we want a better world we make laws to drive bad behavior out of business.
If you want amazon to pay its people more you raise the minimum wage to a livable wage and you increase taxes on rich people.
Those are not going to happen in this second gilded age.
I have no idea what is going to snap but the way things are going it seems unsustainable for it to continue unabated.
The employer match for SS&Medicare is 7.5%, not 15.
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Your ad here. Ask me how!
The summary mentioned $900 billion stock price on profit of $2.5/quarter, or $10 billion / year. So that's a multiple of 90 - saying the company is worth 90 times as much as it earns.
Amazon had revenue of $177 billion, so the stock price is five times revenue.
The ratios are important to investors - they tell you how much investors earn per dollar invested. For Amazon, every dollar invested means your share of profit is 11 cents.
Here are some comparisons to other companies.
General Mills: $16B revenue, $2.5B profit, $26B valuation. Ratios: 1.6 x revenue, 10x profit.
Hewlett Packard: $28B revenue, $3B earnings, $24B valuation. Ratios: 0.8x revenue, 8x earnings.
H&R Block $3B revenue, $0.8B earnings, $5B valuation
Ratio: 8x earnings, 2x revenue.
Charter Communications: $42B revenue, $8B earnings,
$65B valuation. Ratios: 8x earnings, 1.5x revenue
Macy's: $25B revenue, $1.5B earnings, $12B valuation. Ratios: 7.5x earnings, 0.5x revenue.
Kraft Heinz: $26B revenue, $11B earnings, $73B valuation. Ratios: 6.7x earnings, 2.8x revenue.
Tesla: $12B revenue, -$3B earnings, $51B stock valuation. Ratios: -17x earnings, 4x revenue.
So typically for an established company, for each dollar invested you should see about 12 cents profit. Tesla is of course the exception in the list. For each dollar invested, there was 25 cents lost.
I just realized I was missing a decimal point in my post.
Amazon's profit is about 1.1% of its stock price, not 11%. Each dollar invested earns 1.1 cents profit.
More typical, all of the other listed companies, is about 12% profit.
Managers and those responsible for profit can be rewarded
Huh? Are you saying that the people who make the webshop and who actually handle the goods that I order -- the people doing the actual work -- are not responsible for making the profit? If so, why doesn't Amazon fire everyone who are not managers and above, because they are the only ones producing an income?
The truth may be out there, but lies are inside your head
Because those people employed there work for slave wages and the "luxury" of losing their job if they don't "volunteer" for overtime.
Amazon offers stocks to people that are with the company for more than two years; the high turnover rate illustrates the challenge that presents for most employees.
The value in working at Amazon is getting to put "Amazon" on a resume`...if you're lucky you won't be so burned out that you can move onto somewhere else that pays shite.
Amazon's first profitable quarter was Q42001. That's almost 17 years ago, EditorDavid. What is up with your misleading headline?
They are being totally underhanded with their prime subscriptions. For instance, upon buying a product I was given three choices; shipping, free two day shipping, or free two day shipping with Prime subscription. I took the free two day shipping but on completion of prchase there was a small box saying "Welcome to Prime" which I hadn't ordered so I clicked it to make sure I wasn't on Prime and it appeared to say I wasn't.....but I was suspicious so I dug into the settings and found I had been added to Prime free membership which would then start charging me monthly if I didn't unenroll before 30 days. So I unenrolled. Of course the product didn't arrive so I called the help line and was charged a dollar, hopefully sorted it out, and they added me to Prime again without my specific consent. I had to ask the operator about it and specify being removed again. As yet the product has not arrived.......
I reserve the write to mangle english.
Don't forget Amazon is retail, and retail typically does a lot of extra business in Fourth Quarter/December.
I take it you have no IRA, 401K, or other savings account? Because any gains you make there are - by your own logic - theft.
Browsing at +1 - no ACs, I ignore their posts. So refreshing!
Most of Amazon's profit is coming from their cloud services division. I mention this because some people have been pointing to Amazon as an example of how people who foresaw that ecommerce would become a big thing might have invested in Amazon long ago, and are now being rewarded for it. That's not the case at all. Anyone who invested in Amazon because they thought ecommerce would become big ended up picking a winner by sheer blind luck.
In 2017 Amazon's ecommerce division actually lost money globally. The bulk of their profit (net income) has been coming from their cloud services. Basically Bezos started with an online bookstore, expanded it to ecommerce, and along the way just happened to stumble upon the cloud services market which turned out to be the real golden goose. He succeeded by blind luck too, though to be fair his ecommerce operations gave him the financial scale to qualify for loans needed to buy all that AWS hardware.. (If you don't know what AWS is, they provide the hardware and storage that a lot of online companies rely on to function. e.g. Dropbox stored all your files on AWS up until a few years ago. And if a company needs computer hardware for a temporary project, rather than buy it they'll just rent CPU time on AWS.)
4k/year/employee raise would not totally erase their annual profit. It'd erase a 1/4 their profits.
Wow, sent an e-mail as suggested when clicking on "use classic" banner, and got a fast response that addressed my msg
Costco and Amazon have different labor requirements. In brick and mortar stores, the consumer performs the picking operation, meaning they walk to each aisle/bay and pick the items they want to buy and then walk them to the checkout/packing operation.
Amazon, on the other hand, must spend money on human labor and mechanical systems to perform the picking operation for each consumers order and then do more time consuming packing operation compared to brick and mortar (just place it in a bag). In a DC/Warehouse, especially for large ones with many different types of items and especially for high volume small order processing (ecommerce), picking walk distance is the largest cost/waste/nonproductive aspect that is targeted for automation first.
In a partially optimized cart/batch picking environment, pickers easily walk 10 miles per day, which is money down the drain. In a zone pick system with conveyor, that can be cut in half (or more), but the offset is expensive conveyor system. With Kiva robots, they can mostly eliminate the picking operation by humans, although there is a cost for the robots and it doesn't flex as well at peak holiday time because you can't just hire a bunch of temps, you need to have excess robots sitting on the sidelines all year.
No matter how you solve the problem, Amazon's employees and systems must do more work per order than a store like Costco where they need to replen the picking bays but they don't have to pay for the picking operation.
What the hell are you on about? Why would you raise taxes on the rich to support a minimum wage? The minimum wage isn't subsidized by taxes. Lowering business taxes and employment taxes would support higher wages, since it comes from the coffers of companies. Also, slavery is involuntary. The employees at amazon can quit at any moments notice.
I agree they should earn more, and they can. Every bank in the US has a trading account product. They could simply procure shares in the company they work. Had they done so at Amazon, they'd be pretty happy right now.
It would be corrosion to force the employees to work for amazon if they were unhappy with the terms. But it would also be coercion of all the stock holders and of amazon to force them to pay a certain wage.
Now, not with all companies, but certainly a lot of tech stocks are in many portfolios, which back 401k's, union pension funds, retirement investment accounts, and many retail investors who earn not much cash but who are trying to invest in their future. Let's not hurt them to forcibly help the amazon employee. Especially when the amazon employee could save some of their income and purchase stock, joining the former group pretty easily.
Costco has a different business model. Very few employees, relatively few SKU’s, and no guarantee that you’ll be able to buy the same product next month. Also, no stores in poor or lightly populated areas. If they tried to be Walmart, they would end up looking like Walmart. It doesn’t scale like that.
Costco is great if there’s one nearby, and you have enough disposable income to ignore the membership fee. But if you’re in the middle of nowhere, tough. They’re not serving you. I can get to seven Walmarts in a half-hour. Two Sam’s Clubs. But the nearest Costco is three hours away.
People who can barely afford to feed and house themselves should buy shares in Amazon. What with?
Taxes doesn't pay salaries. So how do that make sense?
We don't have a minimum wage in Sweden or Norway.
We do have high taxes and welfare and public paid education though.
Why should the state remove jobs by setting a minimum wage?
Costco and Sam's Club have much the same business model.
Cheap storage VM.
They have a better business model.
It is not better... they just serve a smaller clientele with a smaller number of products than Amazon.
Hence Costco's financial results are poor compared to Amazon.
The lowest costs of labor are slavery and/or indentured servitude. As a society we've decided those aren't fair and made laws to stop them.
Nope. It isn't that they are "unfair". There is no "right" to fairness, only basic human dignity.
The laws that were made are not about "fairness" whatever that is.
We decided, essentially, for religious reasons that it is morally unacceptable to have humans as property --
and all humans have their natural rights.
Which includes the right to choose who to work for and negotiate the terms, Or to choose not to work and starve. --
but not be beaten or violently coerced into working. It's still on the worker to try to negotiate terms, and the law is incapable of forcing terms to be good.
4k/year/employee raise would not totally erase their annual profit. It'd erase a 1/4 their profits.
Yeah it pretty much would.... Did you bother to look at their financials?
This is a manner in which leverage works; destroying $2.2 Billion in Value by paying it out to employees instead of legitimate capital expenditure can actually erase $20 Billion from earnings after it knocks over a whole bunch of dominos, by reducing margins and affecting operating margin/expenses, which include and affect financial health metrics lenders, credit rating agencies, and bond investors are interested in -- thus the lending rates and available capital and financing costs.
If they paid out $4k/Employee today with the idea of it being one year; it could decrease their remaining Cash and Equivalents to 14.43 Billion --- most quarters their change in Cash and Cash equivalents is -2 to -4 Billion per Quarter.
Which is going to required debt payments and financing activities, and they could likely run short on cash in this case --- their supposed profit only exists in theory and could very quickly evaporate if they find themselves in default on substantive financing term s or needing to finance further.
no one thinks its strange how besos is the richest guy when amazon "just became profitabl" or how twitter didnt make a buck for YEARS while everyone got paid and when they went public they sold out in a sec ? not strange ? nothing wonky about it ? cos i think it's quite odd, lobbyright at its best
Free speech was meant to be free for all... how can anyone grow up in a nanny state ?
I’ve been away from civilization for a few days, hence the late reply, but no: Costco and Sams do not have the same basic business model. The superficial reaemblance is just that: superficial. Sams has a much higher store density, and it has always catered to groups like farm families - people who come into town once a month to buy everything they will need until the next visit - and small businesses who want to get foodservice-sized containers of staples, or resale display boxes of candy bars. Costcos are relatively far rarer, and cater to a very different demographic.
Costco has business customers too, check their memberships. Your just in a walmart area of the country. I live by one of both, they are the same.
Cheap storage VM.