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Breakingviews: Facebook canopies Amazon

Friday, July 25, 2014 - 02:54

The social network that started as a mission has become hugely profitable while the e-commerce giant is losing money. Breakingviews discusses the divergent fates of the two companies.

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It's just too big tech stories this week. Amazon and FaceBook company is worth about 360 billion dollars combined. Fascinating tale FaceBook starts as a social mission becomes a massively capitalistic institution. Amazon starts out as a capitalist institutions selling books. Turns into a nonprofit basically so they kind of went outlet and direct I think with profit -- that -- -- with Amazon. Huge court twenty billion of revenue yet that zone money he'll probably 23% but then they had a bigger loss than people expected. What's worse is -- -- next quarter operating loss is going to be far far bigger print for about 690 ambassador gotten used to the story for years I mean Bezos has talked a business founders talked about. It's bill we're gonna keep investing -- to keep building ridiculous and all of a sudden now today we've seen twenty billion dollars mark right to be exact amount of revenue they generate -- quarter just evaporated. At certain point I think investors just got fed up with -- and the problem -- course that Amazon was making profits and kind substantial ones few years ago. That is that OK we need to invest heavily. And it's just gone off and all sorts of different directions I mean just last quarter and they'll and you Smartphone which tracks your head as he watched -- 3-D. Then -- children's series they made specially for employee on any books or whatever they've got it expanded their grocery delivery out on the West Coast and this is the way of it is the way of technology right and we're -- the same thing from schools saving -- but of course. Those companies have huge profits on top of that list of FaceBook and particularly particularly in the basement FaceBook for instance if they they. They're expanding it. Very fast as well spending a lot of money on acquisitions on a lot of things you have the problem is that case but they're operating margins are 50% of that regardless. It perfect parents are you -- 1% becomes operate in current profit. Amazon is is negative. And so investors have to think okay what was more durable business in what's -- about that -- abilities which -- which business do you favor a pro here FaceBook the irony here that you pointed out is that you know in his IPO prospectus Mark Zuckerberg was very clear. He set out from his Harvard dorm room to create a social mission not your company we're gonna change the way people interact with each other with businesses with government. And you know if you look at if you look at case but parents complained about all you know junk on their feet. But the company's just wildly wildly profitable and -- on the other hand went out to stay in ninety. And there are certain books there -- there like you know he's next investment banker he went out you want to. They teach their property went to a statement eaten any stealth taxes all predicated on becoming the wildly profitable company. Instead it is with a lot. Well great story will keep an eye on both of those obviously it will be back with more breaking -- next week.

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Breakingviews: Facebook canopies Amazon

Friday, July 25, 2014 - 02:54