Jacked-up BezosPrime
“When forced to choose between optimizing the appearance of our GAAP accounting and maximizing the present value of future cash flows, we’ll take the cash flows” — Jeff Bezos, first annual shareholder letter from 1997.
In layman terms, this meant Amazon never really bothered about making profits on a quarterly basis and didn’t give a hoot to what Wall St. analysts think about it. And Wall St. got a taste of this last quarter when Amazon reported a 78% drop in earnings. But lo behold, Wall St. was pleasantly surprised last evening when Amazon reported a stellar third quarter performance (sales up 34% overall), sending the stock soaring in after-hours trading. Wall St. analysts openly admitted in the conference call on this “change of attitude from Amazon” — sample this — “You have been pretty consistent on how you reported vs. you guide, so something unusual happened or somewhat unusual happened, what would you attribute that to?” — asked Mark Mahaney of RBC Capital.
Amazon’s cash cow, AWS, as usual, delivered a solid performance with revenues up 42%. But what really surprised everyone was the solid growth seen in its e-com business thanks to its Prime Day and the Indian holiday Diwali contributing as well. Whole Foods, which Amazon basically bought for free, also contributed its might with $1.3 billion in revenue. With the all-important holiday season ahead, Amazon gave a strong outlook (again, strange!) and expects a 28–38% jump in net sales in the fourth quarter.
With Amazon now planning to enter our locked homes (Amazon Key), listening to our intimate conversations (Echo), and watching our every move (Amazon Cloud Cam), looks like a new season of Big Brother is due on Prime Video!
