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Breakingviews: Amazon not so amazin'

Friday, October 24, 2014 - 02:28

Richard Beales and Robert Cyran dissect Amazon's third-quarter earnings for signs that CEO Jeff Bezos' ambitions are exceeding the company's ability to pay for them.

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That Amazon reported third quarter earnings last night. Below been and is a company that rose files but we've. Know very little profit. I'm fortunate that growing less votes with the the big losses NASA what is going on the problem is that this has become more capital intensive they need to invest more and more money to get to get any sort of growth. I am that's because the companies is going to everything and it's it's in the past quarter alone it's the bottom being gaming site for about a billion dollars. It's expanded local grocery delivery it's unveiled a credit card reader and allows Google saying things like that current project and it cause they have this huge webhosting business that'll let kind of stuff well in the problem is that sales there are starting to it. Slow and others like for instance through media sales had just it really poor quarter only about I think about 5% growth which is way down that it's it'll lead which we have twenty billion dollars in revenue courtroom some of that be doing it. Twenty years is that what that's great but the problem is that investors are expecting a time profits from one of them is that one day yet. And the problem is that they're returns on capital invested capital been going down really fast community if you about 2010 missed a 40% in other words they would. Which is every delegate that's great which is fantastic business and it's a three wood dearly want you can see why you heard you'd invest very heavily in the business if you're getting for secretary. Now stands about 6%. And in the last quarter action they're free cash was actually name it that's the first time it's been negative in the third quarter. On since two found at that 2001 I think it so it's it's it's not good places accord that suggests that there's this kind of ambition of Jeff Bezos the sea is. Maybe a little too broad for the money can make exactly his age he's going to all these different areas spending very heavily in the returns just turned there and the growth is there fortunately chip. Of course that could yet happen but what we sow was. Around ten billion dollars by now this morning note to a foot. They'll go for Sampras and that's up to. Falling about 20% this year I think the African services losing faith is that what's going on at that status and I think I think I think they are losing a bit of faith are still a lot of faith built into the stock if you look at the peace and things like you know I think it has also it's it's that beginning innings as a small living entities like that he C. Oh yeah thanks rove will leave animals and then we'll have we'll breaking news for you next week.

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Breakingviews: Amazon not so amazin'

Friday, October 24, 2014 - 02:28

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