
Amazon.com Announces Fourth Quarter Sales Up 38% to $60.5B - adventured
https://finance.yahoo.com/news/amazon-com-announces-fourth-quarter-210100782.html
======
justboxing
Looks like AWS is their Golden Goose, with 64% of their operating income
coming from it. ( The retail side must be operating at very thin margins. )

> For the quarter, AWS sales jumped 45 percent year-over-year, while
> generating $1.3 billion in operating income, a whopping 64 percent share of
> Amazon's total operating income.

Source: [https://www.cnbc.com/2018/02/01/amazon-
earnings-q4-2017.html](https://www.cnbc.com/2018/02/01/amazon-
earnings-q4-2017.html)

Closed at 1,390.00 down -60.89 (-4.20%)

After Hours (after earnings announcement): 1,477.99 up +87.99 (6.33%)

Saw the close and thought the bull run was correcting. 2 hours later, it ups
another 88$. Wow.

~~~
YZF
After hours means close to nothing. Check again tomorrow.

    
    
       Operating income decreased 2% to $4.1 billion, compared with operating income of $4.2 billion in 2016.
    
       Net income was $3.0 billion, or $6.15 per diluted share, compared with net income of $2.4 billion, or $4.90 per diluted share, in 2016.
    

The probably need to get to somewhere around $50B net income to justify their
valuation so they've still a way to go. Their revenue probably also needs an
x10 factor. So back of the envelope says they need to keep growing at a 30%
clip per year over 10 years. That's without taking into account the present
value of that.

~~~
mrits
What does a justified valuation have to do with stock price?

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jxub
What a monster.

I wonder whether AMZN reaches a point where they crush the competition at all
levels and become a glitch in this somewhat functional current capitalist
system, marking the start of a monopoly blob system without a name yet. Then I
remember, their approach now seems to be all about building internal
interfaces and reusing them with the customer in some way (see eg. AWS). It
isn't about destruction, more like symbiosis. But they may still morph the
economy into something different and that change is scary.

~~~
blaisio
That's the story they sell to investors, but real Amazon developers know much
of their internal infrastructure is actually using some old systems and not
AWS. The whole reusing internal interfaces thing isn't what they're doing at
all. Really what Amazon's AWS division is good at is 1) hiring and organizing
engineers and 2) selling their services to companies, sometimes very
aggressively.

~~~
whateveracct
When I worked at an internal Amazon team, we made heavy use of plenty of AWS
services: MySQL on RDS, S3, and SQS for example. What we _didn 't_ use was EC2
et al. There was an internal equivalent for those.

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ironjunkie
I'm somehow in love with Amazon, but also fear how big of a monster they
became.

I can only see it becoming bigger and bigger. They make all the right
disruptive decisions.

------
matte_black
Trillion dollar company by the end of the year.

Sometimes I wonder if I’m just going to be holding my AMZN stock until I
retire.

~~~
savanaly
>Sometimes I wonder if I’m just going to be holding my AMZN stock until I
retire.

An HN comments section is hardly the place to go into this, but I just can't
let a comment like that pass unchecked, so forgive me! But _a company 's
potential growth and the apparent rosiness of their future has nothing to do
with whether you should be holding their stock_. Those factors are taken into
account with the current stock price. You are only justified in having such an
attitude towards any individual stock if you are either a financial genius or
have some insider information.

~~~
adventured
That 230 PE ratio, matched against mediocre earnings growth vs the outsized
valuation, is more than enough to raise serious concerns about the viability
of maintaining such an extreme valuation.

~~~
mrkstu
PE has little to nothing to do with Amazon's stock price. They have, as they
have shown, complete ability to dictate the size of their earnings based on
how much they want to spend on new research and infrastructure.

Amazon could milk its existing assets for a huge return and provide sky high
earnings- instead it is doing what it has done to this point, build dominating
positions in multiple new markets. Bezos has been brilliant in leveraging his
cash generating businesses into growing revenue. There is 0 reason to stop at
this juncture to artificially prop up the PE ratio.

~~~
spott
> They have, as they have shown, complete ability to dictate the size of their
> earnings based on how much they want to spend on new research and
> infrastructure.

I think you are thinking of profit, not earnings. Earnings is revenue - cost
of production, which has nothing to do with R&D or infrastructure development.

~~~
sib
Earnings == profit. You may be thinking of gross margin.

"Earnings are the amount of profit that a company produces during a specific
period, which is usually defined as a quarter (three calendar months) or a
year."

~~~
spott
>[https://money.stackexchange.com/questions/22795/is-there-
a-d...](https://money.stackexchange.com/questions/22795/is-there-a-difference-
between-a-companys-profit-vs-earnings)

This has a different answer than Investopedia.

The difference is subtle, but it is there.

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fancyfacebook
The fact that they are accelerating growth at $200B in sales is utterly
insane. A few more years of this and they will just be able to buy the whole
healthcare industry or basically whatever else they want to do. This kind of
big growth is effectively unprecedented for a company this massive.

~~~
mrep
I know, 5 more years of this and they will be netting a trillion dollars in
sales per year.

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mfoy_
Personally, they got me this holiday season because I originally signed up for
Amazon Prime to watch American Gods... then since I had Prime I got free
shipping...

~~~
bigtones
And that is the Amazon model in a nutshell right there - they will spend over
$6 Billion dollars in 2018 to win you over to their Prime subscription with
either free shipping, movies and tv shows, games, audible, dash, twitch,
music, or discounts. Once they have you in Prime, the convenience as using
Amazon as the source for all your purchases via web, mobile, or voice becomes
the norm.

More Americans now have an Amazon Prime subscription than go to church.

~~~
mulmen
> More Americans now have an Amazon Prime subscription than go to church.

That's extraordinary. Do you have a source on that? My quick Google search
didn't turn up anything reliable.

~~~
ahmadss
1 - Estimated Prime Users - [http://www.businessinsider.com/amazon-prime-
subscribers-tota...](http://www.businessinsider.com/amazon-prime-subscribers-
total-prime-day-chart-2017-7)

2 - Estimated Church Goers - [https://churchleaders.com/pastors/pastor-
articles/139575-7-s...](https://churchleaders.com/pastors/pastor-
articles/139575-7-startling-facts-an-up-close-look-at-church-attendance-in-
america.html)

3 - US Population -- [http://www.worldometers.info/world-population/us-
population/](http://www.worldometers.info/world-population/us-population/)

------
mrep
Link to actual statement provided by Amazon: [http://phx.corporate-
ir.net/phoenix.zhtml?c=97664&p=irol-new...](http://phx.corporate-
ir.net/phoenix.zhtml?c=97664&p=irol-newsArticle&ID=2329885)

------
Dawny33
"the National Football League (NFL), Capital One, DigitalGlobe, and Cerner
announced they’ve chosen AWS for machine learning and artificial intelligence"

Wonder where the NFL uses ML?

~~~
evanriley
"Machine learning is the focal point for a new NFL initiative called NextGen
Stats, which is replacing the NFL’s existing player-tracking system. Powered
by cloud provider Amazon Web Services (AWS), NextGen Stats will track all
basic stats like touchdowns, interceptions, yards rushing, passing yards,
tackles and fumbles, but it will also manufacture a new collection of stats
such as real-time location, speed, and acceleration data. The data is analyzed
on AWS and used to contextualize movement on the field and displayed as a new
experience for fans to see on NFL Media properties, game broadcasts, third-
party digital platforms, and in-venue displays. These new stats will also be
available to players and coaches."

Source: [https://www.itbusiness.ca/news/nfl-adopting-machine-
learning...](https://www.itbusiness.ca/news/nfl-adopting-machine-
learning/97487)

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gok
Internationally they went from losing $1.3 billion in 2016 to $3 billion in
2017.

It's like they're using all the profit from AWS to buy gasoline and matches to
burn piles of cash overseas.

~~~
tyingq
One man's "burn piles of cash" is another man's "grow market share". There's a
lot I don't like about Amazon, but it's hard to say they don't get growth.

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myroon5
Net sales

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danjoc
Alibaba did $25.3B on singles day, for comparison.

~~~
martin-adams
I don't know how easy that is to compare. Amazon did $60.5bn net sales in
Q4/17, and Alibaba did $25.3bn gross merchandise volume on singles day.

I'm finding it hard to know the difference between an Amazon 'net sale' and an
Alibaba 'gross merchandise volume'.

~~~
throw_away2
I'm also having a hard time reconciling this with Alibaba's just-reported
quarterly revenue of $12.8B in 2017Q4:
[http://www.alibabagroup.com/en/news/press_pdf/p180201.pdf](http://www.alibabagroup.com/en/news/press_pdf/p180201.pdf)

Singles' day was 11/11 so it should be in there, no?

~~~
fataliss
I wonder if that's because Alibaba is mostly a marketplace and they sold $25B
worth of stuff with a margin of 5-10% on it, meaning they'd only have
generated ~1-5B for themselves on that day.

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tiernano
They are the only big company I have seen make money from the trump tax thing.
Microsoft, Intel, Apple, etc, all paid a lot more in tax. If I read this
right, amazon got money back...

~~~
myroon5
They had been deferring taxes and then finally paid them with the reduced
rate.

