[HN Gopher] Amazon.com announces fourth quarter results [pdf]
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Amazon.com announces fourth quarter results [pdf]
Author : kgwgk
Score : 47 points
Date : 2022-02-03 21:09 UTC (1 hours ago)
(HTM) web link (s2.q4cdn.com)
(TXT) w3m dump (s2.q4cdn.com)
| anm89 wrote:
| They are up more than 1% of us GDP in after hours trading.
|
| They are up half the entire value of Facebook in after hours
| trading.
|
| They are up about the GDP of Finland in after hours trading.
| [deleted]
| myroon5 wrote:
| AWS with 40% year-over-year growth (and now a $71 billion revenue
| run rate)
| legitster wrote:
| If I understand correctly, their net sales went up nearly 100
| billion dollars in 2021, but their small increase in income
| entirely came from AWS.
|
| It's a pretty common theory that their retail division is just
| around the corner from reaping massive economies of scale. But
| they just had one of the biggest retail years ever had by a
| company in history and might have lost money overall.
| gitfan86 wrote:
| That sounds right, no one ever said that scaling ends at 400B.
| Moeancurly wrote:
| Does anyone without Prime really miss it? Or did you cancel and
| regret it? Mine is up for renewal at the end of this month,
| fairly certain I'm not going to renew regardless of a price
| hike.
| osrec wrote:
| I like the tennis streams on prime video, but they didn't
| show any of the Australian open. That made me consider
| cancelling prime...
|
| The faster delivery is a nice bonus, but I have prime for the
| live tennis content mainly.
| ar_lan wrote:
| In addition to other listed benefits, some Amazon shows are
| pretty decent too. LOTR will be pretty massive.
| Reason077 wrote:
| What do you mean "up for renewal"? You can cancel Prime at
| any time, there's no contract term.
|
| (Personally I keep Prime mostly for Prime Video, and a few
| other perks. I typically only buy a few things from Amazon
| each month, so the free fast shipping is a bonus for me, not
| a must-have).
| hasbot wrote:
| Some people pay annually for a small discount.
| Reason077 wrote:
| Yes, but you can still cancel at any time and get a
| refund.
| dragonwriter wrote:
| But it's still up for renewal at a particular, well-
| defined time, whether or not that is important to you.
|
| So the statement you challenged makes perfect sense.
| Moeancurly wrote:
| I have an annual subscription that renews in March
| Reason077 wrote:
| You can cancel at any time, and receive a pro-rated
| refund if you paid in advance.
| Moeancurly wrote:
| Okay? My question is for people who canceled their
| subscription and regretted it, not sure what your point
| is here.
| darkwizard42 wrote:
| Parent was trying to let you know that it is available
| for cancellation before the year, essentially you can
| cancel at any time.
|
| Their point was you might have erroneously assumed you
| had to make a decision now.
| gordon_freeman wrote:
| Have cancelled mine a few years back as I realized the only
| thing I was using is 2-day shipping but I have been just
| ordering multiple items which exceed $25 to leverage FREE
| shipping and usually they ship fast. So no need for Prime for
| me!
| hasbot wrote:
| It's easy enough to get free shipping without Prime (just
| wait until there are enough items in the cart to get free
| shipping). But I'm still getting value out of Prime streaming
| so I'm keeping Prime until that changes.
| legitster wrote:
| We cancelled once for about 6 months. We missed it. You never
| realize how many little things you buy are only available on
| the internet, and a couple of bad customer service
| experiences made me _really_ appreciate Amazon.
| justinwp wrote:
| I don't miss it. Just watch out that they select
| automatically the non free option for shipping even if there
| is a free option with the same expected delivery. (This is
| for > $25 orders.) I'm located far from a distribution center
| so that might make a difference.
| Workaccount2 wrote:
| I canceled a year ago after 15 years.
|
| I don't miss it at all. I do miss the amazon of 10 years ago
| though.
| bigthymer wrote:
| > I do miss the amazon of 10 years ago though.
|
| Why? What about it do you miss?
| gpt5 wrote:
| I just looked up past orders on my account and there are
| hundreds in 2021. I suggest you do the same, you might be
| surprised.
| openknot wrote:
| Yes, small purchases through Amazon (enabled by Prime due
| to no price minimum for 'free' shipping). I picked up a tip
| on Hacker News to avoid small ~$20 USD purchases because it
| adds up, and this habit has saved me a lot of money.
| Moeancurly wrote:
| Only 22 orders placed in 2021, and a spot check of ~15 of
| the items would ship "free" anyways. I don't care enough to
| check every single item, but of the ones I checked I could
| not find a single one that would have an added shipping
| cost.
|
| The "2 day guarantee" doesn't really exist anymore, so I
| have to ask - what am I paying for?
| [deleted]
| granzymes wrote:
| I buy on the order of ~80 things from Amazon every year.
| Prime more than pays for itself for me.
| neogodless wrote:
| Does it actually "pay for itself" or does it just get you
| items faster (which is you paying for something)?
|
| For me, I go without, and I only buy things with free
| shipping, so having Prime would not save me money; it would
| cost me money.
|
| (I also buy less things when I do not have Prime, so that
| saves me additional money!)
| openknot wrote:
| Similar experience here. I also found that Wal-Mart has a
| similar selection (lower prices for some items) to
| Amazon. It shares the same price threshold for free
| shipping, and also arrives sooner (reliably two to three
| days from Wal-Mart in my area, versus five to seven from
| Amazon without Prime).
| missedthecue wrote:
| I don't even live in a city, but prime gives me free
| overnight delivery on most items if I order in the
| afternoon.
| gundmc wrote:
| Cancelling has made me more deliberate about my purchases,
| which I think has been a net positive. There's a reason why
| every retailer wants to decrease friction in purchases and
| sometimes that little bit of friction is a good thing for
| your wallet.
| jeffsyacht wrote:
| Canceled 5 years ago and don't miss it at all. Sometimes I
| will have to spend 10 minutes longer looking for a supplier
| online, but I can get all the same things for a similar price
| and I haven't had any of the issues I used to with Prime like
| receiving fake shampoo (with brand names misspelled), I get
| equal or better product quality, and I feel better supporting
| local businesses.
|
| Added bonus is I found myself impulsively ordering less
| useless crap since it requires more thought to order and
| isn't delivered immediately.
| fibers wrote:
| tried prime 10 years ago and it wasn't anything worth writing
| about. i dont order that many products from them anyway and
| if i do i would just batch them up to get free shipping
| MattGaiser wrote:
| It probably depends on how you use it. Many of my relatives
| have cancelled it without a problem.
|
| I buy all sorts of one day/same day items that I would need
| to go to a store for otherwise (virtually anything that isn't
| fresh food that you might want same day like toothpaste or
| soap or bandages), so I could never give it up.
| swagasaurus-rex wrote:
| I think about the convenience often, but then I'm reminded
| of the human toil that has to happen to get me my
| convenience.
|
| Though I do have a pharmacy in walking distance so it's not
| much effort for me.
| manquer wrote:
| Reaping economies does not happen the quarter/year you grow
| fast, it takes time to realize that. At high growth phase you
| are spending a lot on inefficient processes and it takes time
| to normalize that ( even for Amazon)
|
| Also last year was expensive for logistics, very expensive in
| part due to the supply chain bottlenecks and delays and using
| alternative shipping like flying more than ships etc. However
| prices for shipping on Amazon has not really gone up that much,
| the lack of profitability may reflect that as well.
| rubyfan wrote:
| agree, it's almost better they didn't suddenly turn a massive
| profit, next cycle they'd be in the mess peloton is in.
| granzymes wrote:
| Even if their retail business only broke even on a unit basis,
| they can still make a killing on advertising. $9 billion this
| quarter!
| time_to_smile wrote:
| I'm endlessly surprised that no one seems to question the
| insanity that advertising can be the major source of revenue
| for so many company.
|
| Advertising, by its nature, derives it's value from the sale
| of other goods.
|
| It should be concerning that more and more companies, major
| household names, make their money off of advertising. It
| fundamentally doesn't make sense.
|
| How much of advertising revenue comes from companies that
| themselves ultimately don't make a profit? So much of our
| current economy is an illusion created by shuffling around
| huge amounts of investor capital to make it look like there
| is money flowing everywhere.
| xwdv wrote:
| Whether ads work or not is irrelevant. The ads must flow.
| WalterBright wrote:
| > Advertising, by its nature, derives it's value from the
| sale of other goods.
|
| You could say the same thing with about every other expense
| of running a business.
| tmule wrote:
| This is a good point. But I wonder if what's being eaten
| into are non-digital sales budgets. Much of the action is
| just moving online.
| nwiswell wrote:
| Certain industries have always had bigger profit margins
| than others.
|
| Turns out that advertising is inherently more scarce than
| consumer goods; while you can manufacture as many consumer
| goods as the market will absorb, you cannot just
| manufacture more human attention. Instead you must compete
| for the limited pool of attention that already exists, and
| established players like Google and Facebook control vast
| amounts of attention without much effort.
|
| This supports a huge differential between the "cost" of
| serving an ad and its market value, whereas if you're
| charging $500 for a toaster somebody else will be selling
| them for $400 by the end of the month.
|
| As for the huge sums of money: it's just a cost of doing
| business. As long as the manufacturers have still have
| nonzero profit margins, and as long as advertising delivers
| as much value as it costs, it's a stable equilibrium.
|
| Damodaran keeps a table of industries by net margin:
|
| https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafil
| e...
| TeeWEE wrote:
| More and more companies go online, try to get customers. So
| they all spend money on getting customers buying their
| product. Even if the ads costs 50% of their profits..
| That's ok.
|
| So, big advertisers like Google and FB make money off
| almost ANY company that becomes successful trough ads. The
| funny thing is: If there are competitors then google or FB
| is making even more money, because they are all bidding for
| the add-spot. And google is walking away with the money.
| And, yeah, some companies lose money to try to push the
| competitors out of market. Through ads.
| gordon_freeman wrote:
| Also retail helps them sell more and more Prime subscriptions
| which would definitely continue to add to recurring
| rev/profits in the long term.
| legitster wrote:
| Prime memberships are not included in their AWS figures. So
| any revenue generated there within is only helping offset
| some of the retail losses.
| skybrian wrote:
| A couple possible reasons:
|
| 1. To profit they'd have to slow down investments in
| improvements to logistics, and they didn't. It doesn't seem
| like the year to do it? 2. Increased labor costs.
|
| You can't figure this stuff out from first principles; you have
| to look at what they're doing.
| granzymes wrote:
| The most significant piece of information, in my opinion, is that
| this is the first time that Amazon has broken out advertising
| services. This disclosure might be contributing to their stock
| performing well after hours, given their guidance miss.
|
| Advertising grew 32% year over year to $9.7 billion during the
| quarter, which puts them third after Google ($61.2 billion) and
| Facebook ($28.3 billion).
| manquer wrote:
| Forward looking guidance is made by the company for the next
| quarter in the current quarter. Missing guidance means that
| company which lot of visibility into its sales and operations
| had unanticipated changes to its operations and that is
| generally bad.
|
| Analysts estimates are made by Wall Street predicting
| performance of the company without insider info (in theory),
| top analysts generally get access to companies they cover while
| company management are not supposed to disclose any material
| non public information in such meetings, even when following
| the law to letter lot of indirect information would become
| available, Matt Levine has written often on Regulation FD [1] .
| The point is estimates have some basis in fact and information
| as well.
|
| [1] https://www.bloomberg.com/opinion/articles/2021-03-09/sec-
| go...
| gpt5 wrote:
| To be fair, everyone knew that Amazon's "Other" category was
| almost entirely advertising in previous reports.
|
| I think that the market is happy for three reasons:
|
| 1. Algorithms misreading the high earnings ($11.8B out of the
| $14.2B is just a Rivian accounting adjustment).
|
| 2. AWS experiencing 40% YoY growth (accelerating QoQ for a
| while, while both Azure and Google Cloud are decelerating).
|
| 3. Advertising doing well.
| granzymes wrote:
| >To be fair, everyone knew that Amazon's "Other" category was
| almost entirely advertising in previous reports.
|
| This is true.
| steelstraw wrote:
| Most of their net income was from the Rivian investment?
|
| Net income increased to $14.3 billion in the fourth quarter, or
| $27.75 per diluted share, compared with $7.2 billion, or $14.09
| per diluted share, in fourth quarter 2020. Fourth quarter 2021
| net income includes a pre-tax valuation gain of $11.8 billion
| included in non-operating income from our common stock investment
| in Rivian Automotive, Inc., which completed an initial public
| offering in November.
| nostromo wrote:
| And Rivian is down 41% since Q4 ended... that'll be a big
| headwind next quarter for Amazon.
| blue_box wrote:
| > With the continued expansion of Prime member benefits as well
| as the rise in wages and transportation costs, Amazon will
| increase the price of a Prime membership in the U.S., with the
| monthly fee going from $12.99 to $14.99, and the annual
| membership from $119 to $139. This is the first time Amazon has
| raised the price of Prime since 2018. For new Prime members, the
| price change will go into effect on February 18, 2022, and for
| current Prime members, the new price will apply after March 25,
| 2022, on the date of their next renewal.
| solidangle wrote:
| Wow, $14.99/month is a stark difference with the EUR2.99/month
| that they charge for a Prime subscription here in The
| Netherlands. I wonder if they will increase the subscription
| fee here to the same level once they reach the desired market
| share in the video streaming and e-commerce spaces here.
| cozzyd wrote:
| My guess is that the logistics of 2 day delivery in the
| Netherlands is much easier.
| [deleted]
| solidangle wrote:
| 2-day delivery would be uncompetitive in The Netherlands.
| Next day delivery is the standard for webshops here, and
| most offer same day delivery as a paid upgrade when you
| either order before noon or live in a large city.
| dmoy wrote:
| Still the general point stands.
|
| The Netherlands is like a quarter of the area of New York
| state alone, and has about the same population.
| ot wrote:
| Or the large markets subsidize the small ones just to
| maintain market dominance.
| lvl100 wrote:
| I see such a big disconnect between AMZN and GOOGL. Google is so
| much cheaper compared to Amazon. And this past quarter showed,
| Google is executing at a much better pace and quality.
| apollo1213 wrote:
| Direct link: https://docmadeeasy.com/v/907248667
| IAmWorried wrote:
| It seems like they mostly missed their projections. Could someone
| help me understand why the stock is spiking after hours?
| chrisseaton wrote:
| Because Amazon's expectations are just one part of the system.
| If they exceeded your expectations you may be bullish today.
| topicseed wrote:
| Sales up 9%, AWS is going strong, and Prime's price is going
| up.
| atwebb wrote:
| >Prime's price is going up.
|
| and it is seen as sticky enough to not lose tons of
| subscribers.
| karmasimida wrote:
| I mean it is merely 6 months of Netflix for you.
|
| To me it is like a steal
| pyrrhotech wrote:
| The numbers were pretty bad, big miss on revenue and guidance
| below analyst expectations. It seems the market was pricing in
| even worse numbers, given the terrible stock performance over
| the last quarter and last 18 months. It's really only up 6-7%
| over yesterday's close after taking out today's fear drop
| related to the abysmal FB report yesterday. After FB's most
| disastrous ER in modern history for a megacap, just about
| anything looks better in comparison.
| coliveira wrote:
| The stock was already down a lot in the last few days.
| Investors just had a moment of relief to learn that the reality
| was not as bad as they imagined.
| paulpauper wrote:
| it was oversold
| blawson wrote:
| Algos trading purely on the EPS beat due to Rivian?
| ganeshkrishnan wrote:
| I dont understand either. I guess it was already oversold for
| days before that which means this is a dead cat bounce or
| traders taking their profits
| post_break wrote:
| Prime membership going up to $139 in the US might be a breaking
| point for a lot of people. Netflix just went up too.
| alangibson wrote:
| Nothing lasts forever, but it's hard not to see AWS and Amazon
| (thanks to Prime) as unassailable.
| qqtt wrote:
| Walmart only announced their prime competitor in 2020
| (Walmart+) and AWS is absolutely ripe for disruption on many
| fronts, including bandwidth fees. If you look around at cloud
| providers, it is getting to be a very crowded space (AWS, GCP,
| Azure, OCI, IBM, etc.) and there is no guarantee AWS will
| remain the go-to for the low hanging fruit web hosting use
| cases which can be currently handled by virtually everybody.
|
| If anything, I would point to Firebase and GCP as the tools
| that have driven the most innovation over the last few years,
| and AWS is looking more and more like a utility with a very big
| service cost (bandwidth) that can absolutely be disrupted.
| Spivak wrote:
| The problem with this theory is that if AWS ever faces a
| significant threat due to their bandwidth fees they'll
| probably end up lowering them even if it's at a loss for a
| while. I don't think AWS is at all threatened by other
| "kitchen sink" providers but by competitors providing better
| service for specific use cases.
|
| Sendgrid vs SES, Auth0 vs Cognito, SNS vs Twilio.
| alangibson wrote:
| Talk of Walmart as a main competitor only makes me more sure
| that no one will touch Amazon any time soon. They bought
| Jet.com for 3.3B in 2016 to try to compete with Amazon. Any
| day now, any day...
| [deleted]
| pulse7 wrote:
| For Titanic somebody claimed that is was practically
| unsinkable: "God himself could not sink this ship!" ... and we
| know what happened...
| alangibson wrote:
| The Dutch East India Company was worth around 6B adjusted
| dollars. Where are they now...
|
| Obviously Amazon is not invincible, but it's hard to imagine
| a scenario where they get beaten. It's going to take the
| ground shifting out from under them.
| openknot wrote:
| The landscape is far from a monopoly: Costco and Wal-Mart
| provide strong competition for Amazon retail, and Azure is
| competing well with AWS too.
| karmasimida wrote:
| AWS has many competitors, definitely not unassailable. For a
| new company to go cloud, I would be happy shopping between
| Azure/AWS/GCP(but not really) to get a desirable deal.
|
| Amazon however has this logistics empire built over past
| decade. It would remain untouchable for a long time.
| ABeeSea wrote:
| The change in cash flow especially cash flow less leases leads me
| to believe they are massively expanding either data centers,
| warehouses, or both. New aws regions? New amazon country
| launches? Or more if each in their existing locales? Either way,
| those are some hefty new investments they put cash down for.
| jsiaajdsdaa wrote:
| Turning inefficient corporate spending into rockets is a really
| interesting phenomenon in our system :)
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