Fire phone represents exactly the kind of innovation apple doesn't do yet is expected of it by everyone.
Like Samsung's increasingly desperate attempts, Amazon confuses innovation for pointless and badly implemented gimmickry. But at least Samsung already has a substantial user base, even though their profits are shrinking. Amazon has no user base in phones, just a very expensive attempt to buy market share, one that looks like it's going to flop spectacularly. When the implications of this finally sink in, a 10% stock price dip will look stupidly tiny.
Amazon is leading the online retail market. I'm surprised there's so much hate here for the company and/or stock. They took a loss because they offered cut throat pricing and invested heavily in their future. Not because they have bad products or a bad business model or bad management.
I see the 10% drop as a buying opportunity.
They have been "investing in thhe future" for 18 years. Eventually they need to actually make some money.
And people wonder where all the US jobs are going?
Amazon is killing a ton of jobs and using the middle classes 401k to subsidize there losses.
Go check your 401k and I almost guarantee your Mutual Fund includes Amazon.
Once the stock tanks Mr Bezo's and his Wall Street friends would have already cashed out and made tens of Billions.
While everyone 401k will be a little bit smaller.
Technology always kills jobs. Digital music killed B&M music stores, digital photography killed film processing businesses. What Amazon is doing isn't new, and has happened a million times over.
No, I don't. But Amazon's hardware products aren't even in the same league as Apple, so there are no worries there. I just don't see this as Apple vs Amazon, sorry. I won't be buying their stock but they're still a great company in my opinion.
I agree. The fire phone might be priced like an iPhone, and marketed as a "sweat the details" phone, but people know the difference.
Amazon built a business on being the online equivalent of Wal-Mart.
In business, you have to be willing to make investments in order to create future revenue streams. But eventually, those investments have to bear fruit. Amazon has been around for nearly 20 years. It's just not going to work to continually trot out the same line that "we're focused on the long term," especially when the market has rewarded Amazon with a high P/E multiple. Also, Amazon has refused to give any information about how its "investments" are performing. Investors can't make an accurate projection of Amazon's investments.
Amazon's business strategy also isn't particularly innovative. During the dot-com era, many companies attempted to employ Amazon's strategy. They sold venture capitalists on the idea of building mindshare first and then becoming profitable. Company after company followed the typical dot-com blueprint. Sell hot air disguised as a brilliant idea and get a VC to write a multimillion dollar check. Go public and watch the stock go into the stratosphere. Post loss after loss and placate investors with grandiose projects about how once the company builds mindshare, profits will follow. Needless to say, that strategy didn't work. Once companies burned through their VC funding, they quickly went bust.
Amazon is one of the few survivors of the dot-com bubble. It has succeeded in employing the strategy that many dot-coms tried but failed to implement-spend their way to the top. Amazon "disrupted" a lot of industries, but I wouldn't say that they accomplished that by offering superior technology. It was by selling products below cost and eating losses. They had superior financial muscle, something that competitors didn't have. As a result, competitors got priced out of the market. The strategy of outlasting competitors in eating losses only works as long as there is cash to cover expenses. Once the money dries up, that strategy won't work.
I really don't understand the gloating of Amazon taking a hit? Is it because they're a "competitor" of Apple? (I don't even see them as a competitor, personally).
anyone who blatantly rips off Apple with their iKnockoffs and iPhoneys and try to profit off of Apple's hard work will get crapped on by the Apple community.
I thought amazon would be the first company to develop a new phone but the fire phone looks so much like iPhone it makes the galaxy s look like a distant cousin.
In business, you have to be willing to make investments in order to create future revenue streams. But eventually, those investments have to bear fruit. Amazon has been around for nearly 20 years. It's just not going to work to continually trot out the same line that "we're focused on the long term," especially when the market has rewarded Amazon with a high P/E multiple. Also, Amazon has refused to give any information about how its "investments" are performing. Investors can't make an accurate projection of Amazon's investments.
Amazon's business strategy also isn't particularly innovative. During the dot-com era, many companies attempted to employ Amazon's strategy. They sold venture capitalists on the idea of building mindshare first and then becoming profitable. Company after company followed the typical dot-com blueprint. Sell hot air disguised as a brilliant idea and get a VC to write a multimillion dollar check. Go public and watch the stock go into the stratosphere. Post loss after loss and placate investors with grandiose projects about how once the company builds mindshare, profits will follow. Needless to say, that strategy didn't work. Once companies burned through their VC funding, they quickly went bust.
Amazon is one of the few survivors of the dot-com bubble. It has succeeded in employing the strategy that many dot-coms tried but failed to implement-spend their way to the top. Amazon "disrupted" a lot of industries, but I wouldn't say that they accomplished that by offering superior technology. It was by selling products below cost and eating losses. They had superior financial muscle, something that competitors didn't have. As a result, competitors got priced out of the market. The strategy of outlasting competitors in eating losses only works as long as there is cash to cover expenses. Once the money dries up, that strategy won't work.
Superior technology doesn’t always win. Plasma was vastly superior to LCD and they're not longer being made. The dot coms went belly up because people simply stopped buying from them. Though Amazon lost money their business actually went up by a lot. One can survive a long time by threading water and keeping one's nose just above the water.
Okay, first, what Buffett has to say regarding such companies:
The worst sort of business is one that grows rapidly, requires significant capital to engender the growth, and then earns little or no money. - Warren Buffett
And then there's my own thoughts:
If you want to make tablets, video streaming hockey pucks and smartphones, essentially shadowing Apple's lines of business, you should expect to be assigned Apple's P/E.
and
Could it be that $800 million in expected Q3 losses is Bezos' early admission that the Fire phone is a flop? An $800 million write-down next quarter should just about cover it.
They are making money, they're just not hoarding it the way Apple does.
Eventually, even if the company takes 100% of its competitor's business and causes every single one to fail, it will have inherited business that the market has traditionally assigned a multiple closer to that enjoyed by its long existing competitors. If the business is twice as efficient or exceeds the business models of its peers in some other meaningful way, it may get a multiple that is twice as high, but still far lower than it enjoyed during its build out phase. If the leader of that company during its build out phase is considered a genius because he sacrifices profits to the gods of growth (how much genius does that take really?) then he may be considered anything but a genius during the period of multiple compression that comes when the rapid growth phase ends and he is expected to now grow profits at a similar rate to the rate of revenue growth the company realized during the grow-at-the-expense-of-profits phase. If he is unable to do so, sentiment regarding his genius may turn quickly into calls for his head while the share price adjusts to the reality of the profit margins attainable for the business he is in.
It is plain to see that Amazon's business model is to sell at unsustainably low prices to drive out the competition and once the monopoly has been established, to start charging monopoly prices (a.k.a. Start gouging). Anyone who says that such a strategy is, in the long run, good for consumers and society as a whole is either an idiot or goes by the name of Jeff Bezos.
Amazon is going down. I don't care how big your volume is. You can't sustain a company with a business plan to bleed money now and somehow make it later on digital content sales. The only question is how it's going down, Hindenburg or Goodyear Blimp with a large leak.
It will be better for the US economy if Amazon goes down slowly over a year. My fear is that it spectacularly combusts in a short panic filled couple of days. If that happens, as it did with Eron and Countrywide or some of the investment banks, then the average person will end up paying. Markets will roil and I'll bet you anything the US Govt slash taxpayer will have to bail BeZos out on TOP of everything lol.
Hope I'm wrong on that one !
I don't mind capitalism run amok to create super companies but not if they're going to tank te economy when everyone realizes the emperor has no clothes lol.
Can someone do the math and see what Apples Stock price/Market cap would be if it had the same P/E ratio , 505,48, as Amazon...?? With the actual volume of individual Orders they have why don't they just do a nominal "transaction" fee.. below $20 / .05c $50 / .50c $250 $1.00 etc.. Having said that the other thing that is looming on their horizon is countries cracking down on the tax loophole. I live in Frankfurt, Germany, Amazons 2nd biggest market and on sales last year in Germany of $8.7 Billion they paid just $3M in tax.. this will end at some points as countries stop the use of the Double Dutch... Does not look good http://www.reuters.com/article/2013/07/12/net-us-amazon-germany-tax-idUSBRE96B0HO20130712
They are making money, they're just not hoarding it the way Apple does.
Every once in a while you let slip something that plainly shows what an outsider you are here.
To your "point," Apple is amassing that money for a purpose, not hoarding it. Remember their stated mission is to change the world for the better by making products and services that people want to use. If you don't think Steve and his pals have thought of some really big future projects, then you have yet to learn anything from Apple at all.
Could it be that $800 million in expected Q3 losses is Bezos' early admission that the Fire phone is a flop? An $800 million write-down next quarter should just about cover it.
Steve Ballmer didn't survive a $900 million write-down of unsold Surfaces. The board would be crazy to let Bezos write-down $800 million and remain CEO for another year.
I really don't understand the gloating of Amazon taking a hit? Is it because they're a "competitor" of Apple? (I don't even see them as a competitor, personally).
I enjoy the hell out of my Amazon Prime membership. I am not interested in owning any of their hardware, but Amazon is a great retailer & they'll be around a long time to come.
I'm not gloating. In fact I love some of their products, like the used books and used CDs. Oh, wait, that's the stores they serve as a portal for. Anyway, While you see them being around for a long time to come, I grew up thinking the same about Sears and Roebucks. Who would have guessed they would have slipped so far in my lifetime.
Exactly. They lack profit because they choose to, not because business is down.
If they choose profits there revenue growth will slow down or stop all together.
Amazon is not going out of business but I expect the stock to go down 50-60%
If Amazon doesn't make profits and declares big loses, the FTC might get all over them for predatory pricing... which in some cases is true. I wonder at times if Barnes and Noble still being in business might be what keeps the watchdogs off of Amazon. The final insult is that like spas that sell "memberships" to cash flow themselves, Amazon sells "Prime memberships" to their biggest suckers spenders, and according to this report has burned through all that money too... what will be their next "sucker" game to squeeze a bit more milk out of the teat?
Incidentally if Amazon were to go down 50% to 60%, what wouldn't you bet that Apple will slide down along with it... just because?
Comments
Exactly. They lack profit because they choose to, not because business is down.
They have been "investing in thhe future" for 18 years. Eventually they need to actually make some money.
Technology always kills jobs. Digital music killed B&M music stores, digital photography killed film processing businesses. What Amazon is doing isn't new, and has happened a million times over.
I agree. The fire phone might be priced like an iPhone, and marketed as a "sweat the details" phone, but people know the difference.
Amazon built a business on being the online equivalent of Wal-Mart.
In business, you have to be willing to make investments in order to create future revenue streams. But eventually, those investments have to bear fruit. Amazon has been around for nearly 20 years. It's just not going to work to continually trot out the same line that "we're focused on the long term," especially when the market has rewarded Amazon with a high P/E multiple. Also, Amazon has refused to give any information about how its "investments" are performing. Investors can't make an accurate projection of Amazon's investments.
Amazon's business strategy also isn't particularly innovative. During the dot-com era, many companies attempted to employ Amazon's strategy. They sold venture capitalists on the idea of building mindshare first and then becoming profitable. Company after company followed the typical dot-com blueprint. Sell hot air disguised as a brilliant idea and get a VC to write a multimillion dollar check. Go public and watch the stock go into the stratosphere. Post loss after loss and placate investors with grandiose projects about how once the company builds mindshare, profits will follow. Needless to say, that strategy didn't work. Once companies burned through their VC funding, they quickly went bust.
Amazon is one of the few survivors of the dot-com bubble. It has succeeded in employing the strategy that many dot-coms tried but failed to implement-spend their way to the top. Amazon "disrupted" a lot of industries, but I wouldn't say that they accomplished that by offering superior technology. It was by selling products below cost and eating losses. They had superior financial muscle, something that competitors didn't have. As a result, competitors got priced out of the market. The strategy of outlasting competitors in eating losses only works as long as there is cash to cover expenses. Once the money dries up, that strategy won't work.
anyone who blatantly rips off Apple with their iKnockoffs and iPhoneys and try to profit off of Apple's hard work will get crapped on by the Apple community.
I thought amazon would be the first company to develop a new phone but the fire phone looks so much like iPhone it makes the galaxy s look like a distant cousin.
They are making money, they're just not hoarding it the way Apple does.
Superior technology doesn’t always win. Plasma was vastly superior to LCD and they're not longer being made. The dot coms went belly up because people simply stopped buying from them. Though Amazon lost money their business actually went up by a lot. One can survive a long time by threading water and keeping one's nose just above the water.
Not necessarily. If they lose all their business as soon as they try to take a profit, they aren't really doing it by choice.
They "choose" to not take a profit because their business model would collapse if they did.
Okay, first, what Buffett has to say regarding such companies:
The worst sort of business is one that grows rapidly, requires significant capital to engender the growth, and then earns little or no money.
- Warren Buffett
And then there's my own thoughts:
If you want to make tablets, video streaming hockey pucks and smartphones, essentially shadowing Apple's lines of business, you should expect to be assigned Apple's P/E.
and
Could it be that $800 million in expected Q3 losses is Bezos' early admission that the Fire phone is a flop? An $800 million write-down next quarter should just about cover it.
Eventually, even if the company takes 100% of its competitor's business and causes every single one to fail, it will have inherited business that the market has traditionally assigned a multiple closer to that enjoyed by its long existing competitors. If the business is twice as efficient or exceeds the business models of its peers in some other meaningful way, it may get a multiple that is twice as high, but still far lower than it enjoyed during its build out phase. If the leader of that company during its build out phase is considered a genius because he sacrifices profits to the gods of growth (how much genius does that take really?) then he may be considered anything but a genius during the period of multiple compression that comes when the rapid growth phase ends and he is expected to now grow profits at a similar rate to the rate of revenue growth the company realized during the grow-at-the-expense-of-profits phase. If he is unable to do so, sentiment regarding his genius may turn quickly into calls for his head while the share price adjusts to the reality of the profit margins attainable for the business he is in.
It will be better for the US economy if Amazon goes down slowly over a year. My fear is that it spectacularly combusts in a short panic filled couple of days. If that happens, as it did with Eron and Countrywide or some of the investment banks, then the average person will end up paying. Markets will roil and I'll bet you anything the US Govt slash taxpayer will have to bail BeZos out on TOP of everything lol.
Hope I'm wrong on that one !
I don't mind capitalism run amok to create super companies but not if they're going to tank te economy when everyone realizes the emperor has no clothes lol.
Every once in a while you let slip something that plainly shows what an outsider you are here.
To your "point," Apple is amassing that money for a purpose, not hoarding it. Remember their stated mission is to change the world for the better by making products and services that people want to use. If you don't think Steve and his pals have thought of some really big future projects, then you have yet to learn anything from Apple at all.
Steve Ballmer didn't survive a $900 million write-down of unsold Surfaces. The board would be crazy to let Bezos write-down $800 million and remain CEO for another year.
I'm not gloating. In fact I love some of their products, like the used books and used CDs. Oh, wait, that's the stores they serve as a portal for. Anyway, While you see them being around for a long time to come, I grew up thinking the same about Sears and Roebucks. Who would have guessed they would have slipped so far in my lifetime.
If Amazon doesn't make profits and declares big loses, the FTC might get all over them for predatory pricing... which in some cases is true. I wonder at times if Barnes and Noble still being in business might be what keeps the watchdogs off of Amazon. The final insult is that like spas that sell "memberships" to cash flow themselves, Amazon sells "Prime memberships" to their biggest
suckersspenders, and according to this report has burned through all that money too... what will be their next "sucker" game to squeeze a bit more milk out of the teat?Incidentally if Amazon were to go down 50% to 60%, what wouldn't you bet that Apple will slide down along with it... just because?