Guest valueInv Posted December 21, 2013 Share Posted December 21, 2013 .. Thus, I would be shocked to begin seeing AMZN's capex requirements moderate significantly. Given the company had capex of $4.6 BN during the same period, it is very hard to argue D&A won't need ongoing replacement, and thus those non-cash adjustments to net income may not really accrue to shareholders over the long term as free cash.with a fast growing co like amzn there should really be a distinction made between maintenance capex & growth capex. as well, a significant part of azmn's COGS today are for new businesses that wont achieve scale, profitability, or even cash flow break-even till 2016 or beyond There is aaa bit assumption that these businesses will hit break even eventually. There is also th assumption that existing businesses are not declining. Link to comment Share on other sites More sharing options...
jschembs Posted December 21, 2013 Share Posted December 21, 2013 .. Thus, I would be shocked to begin seeing AMZN's capex requirements moderate significantly. Given the company had capex of $4.6 BN during the same period, it is very hard to argue D&A won't need ongoing replacement, and thus those non-cash adjustments to net income may not really accrue to shareholders over the long term as free cash.with a fast growing co like amzn there should really be a distinction made between maintenance capex & growth capex. as well, a significant part of azmn's COGS today are for new businesses that wont achieve scale, profitability, or even cash flow break-even till 2016 or beyond . Agreed that a distinction b/w growth and maintenance capex is valuable; my point was moreso that AMZN is hardly an asset-light technology or services business. Computer equipment is notoriously short in its economic lifespan, and while there's certainly some operating leverage to be expected in their warehouse build out, my bet is that AMZN's competitive edge in logistics and efficiency requires more ongoing investment (whether via traditional capex or R&D) to remain competitive than many believe. Also, can you speak to the component of AMZN COGS that is related to future benefits for the company? COGS by definition are the expenses associated with current revenue. I haven't spent a whole lot of time analyzing the 10Ks, so it's not a loaded question :) Another $1 BN of AMZN's OCF relates to more non-cash addbacks for stock compensation. I presume no one on this board is naive enough to think that expense doesn't have a far less visible but deleterious effect on shareholder value via dilution.amzn has been expensing their stock options since 2002, so that's a hit to their income statement. as far as dilution goes I think you'll find amzn is quite cognizant of the tradeoffs (just read thru his annual letters) & manages it in a thoughtful way. their share count growth has been quite tame in comparison with other hi growth or hi tech co's. Bezos has said he tries to cap it at no more than 3%. That's fine; my point was that while adding back stock comp one needs to recognize the dilution. In other words, this isn't an add-back with no side effects to shareholders. Lastly, AMZN's ability to run its operations with negative working capital generated an incremental $1 BN (approx) in OCF. This, however, is a transitory source of cash that can easily become a use of cash if/when growth slows. I don't see how slowing growth would affect its negative working capital, or how slowing would become a use of cash. if amzn suddenly suffered the reverse of growth, that's another story. and I don't think amzn's neg working capital is transitory at all. its shown persistence. that wont change until they lose their moat. I just wanted to point out that a large portion of AMZN's OCF comes from working capital changes, which one could argue is more of a financing than operating benefit. As a shareholder, I wouldn't want to rely long term on the company's ability to stretch the hell out of their vendors. AMZN is a really interesting company, no doubt. A wonderful investment, however, I'm not so sure. Low margins themselves aren't necessarily a bad thing. I've seen cardboard packaging distributors with 15% gross margins that can achieve ROIC >30% because of phenomenal operating cost discipline and working capital management. AMZN generates gross and EBITDA margins of roughly 20-25% and 5%, respectively. Those are bad margins. Even with negative working capital, however, they're generating an ROIC of ~5% the last three years. That's also bad. The intent of my original post was to illustrate that all cash flows are not equal. If you don't buy off on those points, it's worth asking how a dominant, leading business with apparently significant moats cannot generate an ROIC that exceeds the cost of that capital. Link to comment Share on other sites More sharing options...
Guest ajc Posted December 27, 2013 Share Posted December 27, 2013 In a recent interview on 60 minutes Amazon revealed they were working on drone delivery for packages up to 5 pounds. Thought it would be possible to implement in about 5 years. Earliest that it could be done is 3 years due to Needing FAA approval. Edited to change FFA to FAA Not sure if that 60 Minutes interview was posted elsewhere, but here it is in any case: http://www.youtube.com/watch?v=6in-MZeeeGk Link to comment Share on other sites More sharing options...
fareastwarriors Posted December 28, 2013 Share Posted December 28, 2013 http://www.businessweek.com/articles/2013-12-26/amazon-reveals-holiday-sales-facts-cyber-monday-orders-rose-39-percent-and-other-fun-facts#r=hpt-ls Amazon Reveals Holiday Sales: Cyber Monday Orders Rose 39% Link to comment Share on other sites More sharing options...
Guest valueInv Posted January 30, 2014 Share Posted January 30, 2014 Another one: http://techcrunch.com/2014/01/30/amazon-falls-short-of-expectations-with-q4-revenue-of-25-59b-eps-of-0-51/ Trading down 10% after-hours. Link to comment Share on other sites More sharing options...
Guest valueInv Posted January 30, 2014 Share Posted January 30, 2014 Haven't fuel costs been dropping? http://venturebeat.com/2014/01/30/amazon-said-prime-membership-price-may-increase-20-40/ Link to comment Share on other sites More sharing options...
JAllen Posted January 31, 2014 Share Posted January 31, 2014 Haven't fuel costs been dropping? http://venturebeat.com/2014/01/30/amazon-said-prime-membership-price-may-increase-20-40/ Not since they launched Prime in 2005. WTI traded at ~$45 in 2005. Also, they can say one thing and mean another, which is perfectly fine. They're allowed to raise prices for whatever reason they want. I think it's a great sign they're raising prices personally, though I probably wouldn't raise it $40 at once. Maybe $20 now, another $20 in a couple of years. But of course the company has incomparable amounts of information about the inputs involved in making a decision about this than any of us do. Link to comment Share on other sites More sharing options...
Guest valueInv Posted February 3, 2014 Share Posted February 3, 2014 Good growth at AWS: http://gigaom.com/2014/01/30/wow-amazon-web-services-had-another-bang-up-quarter/ Link to comment Share on other sites More sharing options...
saltybit Posted February 3, 2014 Share Posted February 3, 2014 The Prophet of No Profit: How Jeff Bezos won the faith of Wall Street. http://www.slate.com/articles/business/moneybox/2014/01/amazon_earnings_how_jeff_bezos_gets_investors_to_believe_in_him.single.html Link to comment Share on other sites More sharing options...
rkbabang Posted March 13, 2014 Share Posted March 13, 2014 Haven't fuel costs been dropping? http://venturebeat.com/2014/01/30/amazon-said-prime-membership-price-may-increase-20-40/ Not since they launched Prime in 2005. WTI traded at ~$45 in 2005. Also, they can say one thing and mean another, which is perfectly fine. They're allowed to raise prices for whatever reason they want. I think it's a great sign they're raising prices personally, though I probably wouldn't raise it $40 at once. Maybe $20 now, another $20 in a couple of years. But of course the company has incomparable amounts of information about the inputs involved in making a decision about this than any of us do. I just received the email today (see attached). A $20 increase next year. Link to comment Share on other sites More sharing options...
txlaw Posted March 25, 2014 Share Posted March 25, 2014 Google making a big push to take biz away from Amazon AWS: http://www.wired.com/wiredenterprise/2014/03/urs-google-story/ And Microsoft is expected to rebrand Azure from Windows Azure to Microsoft Azure to drive sales: http://www.zdnet.com/microsoft-to-rebrand-windows-azure-as-microsoft-azure-7000027590/ I think I've mentioned this before, but Amazon has likely been making huge profits on its AWS biz (everyone I know who uses it -- or competes with it -- says it's really expensive) and investing it all back into growth initiatives. But we might finally be seeing some real competition in the "public cloud" space from the likes of Google, Microsoft, OpenStack providers like Redhat, and even companies like Digital Ocean. Prices to continue to drop, I suppose. Link to comment Share on other sites More sharing options...
Palantir Posted March 25, 2014 Share Posted March 25, 2014 I just don't see the upside for Google to move into this, or any potential edge against AWS. MS Azure has potential, as they have a different model, and an institutional sales channel where they can build both private and public clouds....but I don't really see what Google could bring. Link to comment Share on other sites More sharing options...
Liberty Posted April 1, 2014 Share Posted April 1, 2014 Amazon adds more than a million products to Canadian store: http://www.cbc.ca/news/business/amazon-beefs-up-online-offerings-in-canada-1.2593861 I'm not a shareholder, but its nice as a Canadian shopper :) Link to comment Share on other sites More sharing options...
tombgrt Posted April 4, 2014 Share Posted April 4, 2014 So no more FREE super saver delivery for me (Belgium) when I order from Amazon UK. I have spend at least 500-750€ on books (all small items) these last few years, mainly because there were no shipping costs. Now it would costs me GBP 4.70 for books. No more <50€ orders for me. Link to comment Share on other sites More sharing options...
jouni1 Posted April 4, 2014 Share Posted April 4, 2014 they stopped free super saver to finland also. although there are rumors they're setting up in sweden, to serve northern europe. might be to drive customers to the local version. Link to comment Share on other sites More sharing options...
Phaceliacapital Posted April 4, 2014 Share Posted April 4, 2014 So no more FREE super saver delivery for me (Belgium) when I order from Amazon UK. I have spend at least 500-750€ on books (all small items) these last few years, mainly because there were no shipping costs. Now it would costs me GBP 4.70 for books. No more <50€ orders for me. "At another point in the interview, Bezos describes the “Amazon cocktail” of customer-centricity, long-term thinking, and a focus on invention." Let's hope that his long term thinking is a fullfilment center in Belgium, although we both know that this is a pipedream with our current labor system. Link to comment Share on other sites More sharing options...
tombgrt Posted April 4, 2014 Share Posted April 4, 2014 So no more FREE super saver delivery for me (Belgium) when I order from Amazon UK. I have spend at least 500-750€ on books (all small items) these last few years, mainly because there were no shipping costs. Now it would costs me GBP 4.70 for books. No more <50€ orders for me. "At another point in the interview, Bezos describes the “Amazon cocktail” of customer-centricity, long-term thinking, and a focus on invention." Let's hope that his long term thinking is a fullfilment center in Belgium, although we both know that this is a pipedream with our current labor system. Jup. ;( There have been rumors for Belgium as well but I'm afraid it there is little truth to it. Link to comment Share on other sites More sharing options...
Phaceliacapital Posted April 4, 2014 Share Posted April 4, 2014 Bezos is crazy, but not crazy enough to setup a labor heavy enterprise in Belgium :D Btw I asked, this was his reaction: Link to comment Share on other sites More sharing options...
moody202 Posted April 4, 2014 Share Posted April 4, 2014 And Microsoft is expected to rebrand Azure from Windows Azure to Microsoft Azure to drive sales: http://www.zdnet.com/microsoft-to-rebrand-windows-azure-as-microsoft-azure-7000027590/ Another great example of how Microsoft time and again fails to take the leadership position while playing in the market. We have seen this story before with mobile phones, tablets......I won't bet just yet that MS's new CEO is going to change the culture enough. Link to comment Share on other sites More sharing options...
dcollon Posted April 24, 2014 Share Posted April 24, 2014 Amazon Prime Pantry is pretty interesting. Anyone tried it yet? http://www.engadget.com/2014/04/23/amazon-prime-pantry/?ncid=rss_truncated Link to comment Share on other sites More sharing options...
Liberty Posted April 24, 2014 Share Posted April 24, 2014 Amazon Prime Pantry is pretty interesting. Anyone tried it yet? http://www.engadget.com/2014/04/23/amazon-prime-pantry/?ncid=rss_truncated Maybe I'll give it a try in 10 years when it comes to Canada... In other amazon news: http://online.wsj.com/news/article_email/SB10001424052702304788404579521522792859890-lMyQjAxMTA0MDIwNDEyNDQyWj Amazon, in Threat to UPS, Tries Its Own Deliveries The future of Amazon.com Inc. is hiding in plain sight in a San Francisco parking lot. There, adjacent to recently closed Candlestick Park, Amazon is testing its own delivery network for "the last mile," the final leg of a package's journey to consumers' doorsteps. Trucks loaded with Amazon packages and driven by Amazon-supervised contractors leave this parking lot for homes and offices around San Francisco. Similar efforts are under way in Los Angeles and New York. Delivering its own packages will give Amazon, stung by shipping delays last Christmas, more control over the shopping experience. The retailer will gain flexibility regarding when packages are delivered and help in containing shipping expenses, which grew 29% last year. As a percentage of sales, Amazon's shipping costs have grown each year since 2009, according to securities filings. Just as important, the new delivery efforts will get Amazon closer to a holy grail of e-commerce: Delivering goods the same day they are purchased, offering shoppers one less reason to go to physical stores. With its own trucks, Amazon could offer deliveries late at night, or at more specific times. Link to comment Share on other sites More sharing options...
txlaw Posted May 5, 2014 Share Posted May 5, 2014 WEB and Munger on Amazon (and Bezos): http://video.cnbc.com/gallery/?video=3000272547 Link to comment Share on other sites More sharing options...
Laxputs Posted May 6, 2014 Share Posted May 6, 2014 Help me with a hypothetical: Suppose Amazon had owners' earnings (that is, cash flow from operations - maintenance capex) of 4 billion. That works out to 8.55/share. So suppose they trade at 36x OE. If my hurdle rate is 10%, what kind of growth rate to they need to achieve for me to make the investment? Link to comment Share on other sites More sharing options...
PatientCheetah Posted May 6, 2014 Share Posted May 6, 2014 Help me with a hypothetical: Suppose Amazon had owners' earnings (that is, cash flow from operations - maintenance capex) of 4 billion. That works out to 8.55/share. So suppose they trade at 36x OE. If my hurdle rate is 10%, what kind of growth rate to they need to achieve for me to make the investment? Multiple is a function of both growth rates and the duration of economic profits. Both Google and Amazon get high multiples because their moats are so deep that I can't see anyone becoming a competitive threat to them in the foreseeable future. Link to comment Share on other sites More sharing options...
Laxputs Posted May 6, 2014 Share Posted May 6, 2014 Suppose the multiple comes down to 15x fcf in 10 years. How much growth do they need between now and then to earn 10% a year? Link to comment Share on other sites More sharing options...
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