[HN Gopher] Amazon Q4 2022 Financials
___________________________________________________________________
Amazon Q4 2022 Financials
Author : makaimc
Score : 69 points
Date : 2023-02-06 15:47 UTC (7 hours ago)
(HTM) web link (www.tbray.org)
(TXT) w3m dump (www.tbray.org)
| laluser wrote:
| If AWS is spun off, then I don't believe retail would be able to
| survive. Online retail vs. brick and mortar still has a lot of
| growth left and it won't make sense to spin it off until it grabs
| an even bigger piece of the pie.
| [deleted]
| whatever1 wrote:
| Amazon retail is the biggest client of AWS, and a lot of
| dogfooding of new AWS products is forced.
|
| AWS has the perfect large-scale lab to test things.
| MuffinFlavored wrote:
| > If AWS is spun off, then I don't believe retail would be able
| to survive.
|
| At a really high/overly-simplified level, how far off from
| probability is their retail section? Do they just need to semi-
| aggressively tweak some margins about 2-3% in maybe their
| shipping cost/subsidizing department, slow down on
| R&D/reinvestment into this sector by about 2-3%, and maybe
| swing their marketplace fees 1% and boom, they are in business?
|
| Or is it more complicated?
|
| I wonder how much fat there is to trim in this sector of their
| business, if any.
| cduzz wrote:
| I believe that if "storefront" was spun off of AWS, AWS would
| falter less than a decade.
|
| Having an anchor tenant with "2014" problems in 2010, or "2020"
| problems in 2015, especially if they roll up to the same CEO as
| your org, gives the org a huge head start in making software
| and platforms that will, once 2020 actually rolls around be
| tremendously compelling to everyone else.
| tofuahdude wrote:
| For what reasons would AWS falter in less than a decade if it
| were on its own?
| cduzz wrote:
| Amazon provides AWS with problems to solve that are going
| to be general problems to solve in 2-3 years. Amazon
| developed DynamoDB and S3 and handed them off to AWS to
| operate, for instance.
|
| Without Amazon's innovation funnel, AWS will be Rackspace
| in 10 years (well, maybe Oracle in 5 years). Maybe they'd
| keep adding more hosted services (Announcing ClickTower,
| our columnar database as a service!) but that's not
| innovation.
| sokoloff wrote:
| Retail survived for over a decade before AWS launched (and when
| AWS launched, it obviously wasn't carrying the company for many
| years after that).
|
| Why do people think Amazon retail couldn't survive now without
| AWS, when it survived just fine before AWS? (And now has Prime,
| advertising, and 3PS/marketplace fees as a logical part of the
| Retail/non-AWS unit.)
| moneywoes wrote:
| They would just increase their prices and be fine
| protastus wrote:
| This is the essence of anti-trust.
|
| The Amazon retail business would struggle to compete
| effectively on its own, and would have to work on its
| weaknesses. As a whole, the economy would be better off.
| repsilat wrote:
| You could argue it both ways.
|
| The essence of US antitrust is consumer harm. If Amazon were
| broken up the retail arm might die, and consumers would
| arguably suffer -- they wouldn't receive the subsidies they
| currently get from AWS, they'd pay more for products and get
| slower shipping.
|
| To argue that Amazon retail consumers would be better off
| without the subsidies from AWS takes some slightly more
| complex logic -- that increased Amazon prices would lead to
| more competition and so lead to lower prices (or better
| quality). IMO that argument is tenuous.
|
| If Amazon, having killed off its competition, were to _raise_
| prices I think you 'd have an argument, but at the
| "undercutting" stage I think (IANAL) they're safe.
| drstewart wrote:
| How far do you take this? An individual developer would
| struggle to compete effectively on its own, and would have to
| work on their weaknesses. As a whole, the economy would be
| better off. So should we break up every venture of more than
| one person?
| steveBK123 wrote:
| I wonder what we will see from AWS as we go through an economic
| cycle though. Great business when everyone wants to scale up.
| Maybe not a great business when people want to scale down.
| __derek__ wrote:
| AWS has a lot of pre-committed revenue[1]:
|
| > For contracts with original terms that exceed one year,
| those commitments not yet recognized were $110.4 billion as
| of December 31, 2022. The weighted average remaining life of
| our long-term contracts is 3.7 years. However, the amount and
| timing of revenue recognition is largely driven by customer
| usage, which can extend beyond the original contractual term.
|
| Even if new business stops, and that revenue extends beyond
| contracted terms, it should provide a nice cushion.
|
| [1]: https://d18rn0p25nwr6d.cloudfront.net/CIK-0001018724/d2f
| de7e... (10-K, page 49)
| jcdavis wrote:
| Sounds like for the best for the economy (also presumably,
| never going to happen).
| dzink wrote:
| This is where an MBA helps, or a really good article like this
| one: https://commoncog.com/cash-flow-games/
|
| TLDR: If you have predictable money coming on because you are so
| necessary to society (like a utility), instead of paying profits
| to the government, you can take loans against your cash flow and
| grow by acquiring businesses with the extra cash. You will always
| seem unprofitable, and you get to benefit from loan interest
| deductions on your predictable cash, but in reality you grow
| bigger than ever, through acquisition. Another thing Amazon has
| going for it is the 30-60-90 terms it has with many suppliers and
| affiliates - they make the money now and pay them a month or
| three months from now. That makes them further bank in huge
| valuation compared to the rest of the sector. Cash flow is king.
|
| That is why Leveraged Buyouts were a big thing for a while and
| why when interest rates go up, the math for many of these levered
| giants stops working or needs adjustment. Toys RUs are an
| example. It's a very valid growth approach, and it works well if
| you can afford (and don't overdo it).
| boppo1 wrote:
| Do you have an MBA? If not, where'd you learn to recognize
| stuff like this?
| finikytou wrote:
| you should go out and look at whole food shops, walk in the
| streets early at delivery time to see in the trucks what kind
| of package people are getting (PRIME is now a word of english
| vocabulary), what video people have on their door, how many
| people hire amazon, how they have airline, all it takes is
| noticing all those daily influence that amazon has on
| professional and individuals life. they are the biggest
| company that has ever been in the western world. by a huge
| margin. and big is scary to government. big is scary to
| people. better look big and broke than big and financially
| looking like you killing everyone else
| sokoloff wrote:
| How much of Amazon's airlift is in-house vs Atlas, ATSG,
| and Kalitta? I mostly see and hear the latter three, but I
| admit to not knowing just how tightly controlled or owned
| they are vs just contracted lift.
| lackbeard wrote:
| >And why is it legal for Amazon to be the prime competitor of the
| economy's whole retail sector while not having to make a profit?
|
| I wish the author had elaborated on why it should be illegal. (Or
| maybe, how it is?)
| unity1001 wrote:
| > I wish the author had elaborated on why it should be illegal.
| (Or maybe, how it is?)
|
| Its implicit - an actor is taking over entire societal
| logistics and ecommerce while burning investor money with no
| obligation to make profit, hence be sustainable. (applies to
| many tech giants). Practically becoming a public utility that
| the society depends on for running itself day to day.
|
| If that actor goes tits up, then the entire society will
| experience chaos due to that supposedly private, but actually
| public infrastructure crumbling down with nothing at that scale
| to back it up.
|
| Its too risky and irresponsible. You can bet that they will
| force the government to bail it out if that happens, by saying
| that it is 'too big to fail'. Socialized costs. Privatized
| profits.
| mabbo wrote:
| I don't think Amazon Advertising should be considered separately
| from Retail.
|
| A huge portion of it's money comes from people paying for the top
| search result on Amazon's retail site. Oh sure, they ad a very
| tiny "sponsored" but you have to scroll past three of those
| before you see the actual search result.
|
| But if Amazon Retail didn't exist, Amazon Ads wouldn't either.
| Meanwhile, AWS could be split off as an independent company and
| be quite successful.
| timbray wrote:
| We agree, AWS is a clean break, ads is way more messy.
|
| But ads only works because of Amazon retail's sorta-kinda-
| monopoly position. It's still a big distortion of the market.
| But I don't have a bright idea what to do about it.
| cbsmith wrote:
| Amazon retail is a tent pole... Not unlike a blockbuster
| movie that might not even be profitable, but creates profits
| for all kinds of businesses around it.
| jsnell wrote:
| Isn't it kind of self-correcting? The more Amazon pushes
| products sold by third parties, the worse shopping at Amazon
| becomes. The worse shopping at Amazon becomes, the more
| people will shop elsewhere and not see the ads.
| __derek__ wrote:
| Absolutely. Every HN thread about Amazon retail is littered
| with comments about giving up on shopping there and finding
| a better experience (e.g., less junk, cheaper prices,
| better selection) elsewhere. If anything, the growth of
| Amazon Ads has pushed e-commerce spend to Walmart, the
| actual leader in retail.
| thexumaker wrote:
| lmao as someone who spent a couple months at Walmart
| global tech, they may be the leaders in retail but they
| are not stealing Amazon customers. If anything Target,
| Wayfair, Best Buy, TJ Max etc are taking more market
| share.
|
| Last time I shopped at Walmart, it was a mess and their e
| commerce is even worse, products come all beat up, 3rd
| party policies are a free for all atm, and the scams are
| even worse there
| __derek__ wrote:
| The other stores' taking e-commerce share would be
| consistent with the spirit of the comment, IMO.
|
| I agree on the third-party products/listings. I have to
| assume that Sam Walton is turning in is grave because it
| all seems like a perversion of old-school merchandising.
| _rs wrote:
| I agree 100%. However, a lot of my woes with Amazon are
| due to inventory commingling- because I make sure to only
| buy Ships & Sold by Amazon items.
|
| With that said, Walmart is beginning to push 3rd party
| sellers a lot online too, and filtering for items sold by
| Walmart can be difficult. A lot of times items show up as
| in stock in search results only to actually not be in
| stock when I finally load the product or cart pages, and
| Walmart will often switch these to in-store pick up
| automatically which is frustrating as the nearest store
| to me is quite far. I've had good luck shopping at Target
| but their prices are almost never as competitive.
| __derek__ wrote:
| That sounds like a frustrating experience. I don't shop
| at Walmart because Seattle is kind of a Walmart desert
| (whereas Amazon return drops are _everywhere_ ), but it
| always seems like there are comments promoting it in
| those threads.
| jacobr1 wrote:
| Also the ads are generally directed to some _other_ site,
| they are for hosted-on-amazon-retail storefronts or product
| listings.
| HDThoreaun wrote:
| I'm not sure we do. Amazon retail at this point from a
| business perspective is nothing but a way to sell ads.
| Talking about retail losing money when not counting ads is
| like saying google search loses money when not counting ads.
| And no, Amazon would still be able to sell ads if they had a
| smaller market share.
| di456 wrote:
| Per SEC rules, once a business reaches a certain size it has to
| be detailed out on the financials. That's why the ads business
| is reported separately now
| [deleted]
| alberth wrote:
| I'm not certain that is accurate.
|
| E.g. Apple famously doesn't report App Store revenues.
| Instead it's just part of their "services" revenue which
| includes several other things.
| di456 wrote:
| You can read more about it under "Accounting Pronouncements
| Recently Adopted" in this 10k report, page 48 https://www.s
| ec.gov/Archives/edgar/data/1018724/000101872419...
|
| Edit: guess it was FASB, not SEC
| alberth wrote:
| > _" In May 2014, the Financial Accounting Standards
| Board ("FASB") issued an Accounting Standards Update
| ("ASU") amending revenue recognition guidance and
| requiring more detailed disclosures to enable users of
| financial statements to understand the nature, amount,
| timing, and uncertainty of revenue and cash flows arising
| from contracts with customers. We adopted this ASU on
| January 1, 2018 for all revenue contracts with our
| customers using the modified retrospective approach and
| increased retained earnings by approximately $650
| million."_
|
| The only section in the 10K referencing FASB is above.
|
| This is related to reporting CUSTOMER contracts, not a
| requirement to report Business Division revenue (like
| Amazons Ad Business).
|
| The reason for this change, which again is unrelated to
| the original topic at hand, is that it posses a financial
| risk to investors if X customer represents a significant
| portion of the companies revenue.
| di456 wrote:
| Farther down in that section:
|
| > Certain advertising services are now classified as
| revenue rather than a reduction in cost of sales
|
| Reading in-between the lines on this, advertising flipped
| from retail contra-cogs to it's own revenue segment.
| Advertising biz got to big to report like that.
| JCM9 wrote:
| +1. Not much different than Google probably losing a ton of
| money on core search to create a market for what does make them
| money (selling advertising on search).
| jjoonathan wrote:
| Does it count as search or ads if every above-the-fold
| "result" is actually an ad?
| rhplus wrote:
| AWS brings in something like 16% of total revenue, but accounts
| for 74% of profits. No way would it be split off.
| chx wrote:
| Let's see what Lina M. Khan has to say about that, shall we?
| HillRat wrote:
| Advertising used to be treated as a Retail line item, but Bezos
| deliberately broke it out to put profitability pressure on
| Retail by not giving them a way to hide their losses in the
| bottom line.
| benjaminwootton wrote:
| I was going to make the same point. Their retail business could
| lose $billions if people are paying more $billions to advertise
| on top of the same platform.
|
| It's a smart move to use single digit margins in retail as a
| route to making double digit margins in online advertising.
| MuffinFlavored wrote:
| > A huge portion of it's money comes from people paying for the
| top search result on Amazon's retail site.
|
| What are some of the average metrics for the average Amazon
| seller doing paid advertising? Cost per impression, cost per
| click, cost per conversion/sale?
|
| I wonder how they compare to Google AdWords.
| qbasic_forever wrote:
| If AWS was split off it would be kind of funny if Microsoft or
| Google immediately purchased it outright.
| room271 wrote:
| There is no chance the competition authorities would allow
| that.
| runamok wrote:
| See ticketmaster and live nation or T-Mobile and sprint.
| The anti-monopoly folks seem asleep at the wheel to me.
| qbasic_forever wrote:
| Microsoft has embedded itself deeply into the democratic
| party through huge PAC donations over decades. If anyone
| has sway with the democratic appointed FTC, it would be
| them.
|
| Acquiring AWS would absolutely be the kind of
| emergency/pull out every stop to make it happen event worth
| tapping every connection (and then some) to make happen.
| Overnight they would go from scrappy second place to the
| dominant provider of all cloud computing on the planet.
|
| Far more dumb mergers were greenlit in the past like
| AOL/Time Warner.
| mikeyouse wrote:
| Aside from a general lack of understanding of PAC
| funding, I take it you're unfamiliar with the work of
| Lina Khan who's the chair of this FTC?
|
| https://siliconangle.com/2021/12/23/report-ftc-chair-
| lina-kh...
|
| https://www.nytimes.com/2022/12/09/technology/lina-khan-
| ftc-...
| qbasic_forever wrote:
| https://www.opensecrets.org/orgs/microsoft-
| corp/summary?topr...
|
| In the 2020 presidential election year Microsoft donated
| over 21 million dollars, almost all to democrats and the
| Biden campaign. They were the 26th largest donor, period.
|
| Biden appointed Lina Khan, she owes her job to him (and
| he can choose not to appoint her again!). Biden owes a
| substantial amount of his presidential campaign funding
| to Microsoft... not hard to connect the dots here.
|
| Go back decades--Hillary Clinton, Obama, Gore, etc. and
| Microsoft was always been donating enormous amounts of
| money to democratic candidates.
| rnk wrote:
| Wow, the 26th largest donor, that sounds like a threat to
| democracy. Microsoft also gives money to republicans.
|
| How about an actual threat, the Koch family (one of the
| infamous brothers died), who by themselves have a budget
| about the same size as the entire us republican party,
| and have taken it upon themselves to select the next
| republican presidential candidate - and they will back
| that up with enormous spending. Regardless of your views
| on the political parties specific choices, it's a bad
| idea for a private group to control (or credibly attempt
| to control) who can run for president - this is
| fundamentally different than microsoft's donations (even
| if I don't like that corporations are putting money into
| politics). Koch have had a lot of success in setting the
| previous few decade's political framework about how the
| us looked at international trade, along with influencing
| the libertarian party (David Koch was the Libertarian VP
| candidate in 1980, but had enormous impact on that
| movement over time).
| mikeyouse wrote:
| Again, you should really read up on what a PAC is before
| you form your conspiracy theories. Those are donations
| from _Microsoft employees_ - not from the company, hence
| the big bold warning label:
|
| "NOTE: Organizations themselves cannot contribute to
| candidates and party committees."
| [deleted]
| cperciva wrote:
| Google would need to pay _Google 's entire market cap_ to buy
| AWS. Not happening!
| tester756 wrote:
| What? what are the numbers?
| cperciva wrote:
| Google's market cap is $1.33T. Amazon's market cap is
| $1.04T, of which most (possibly _more than all_
| considering that retail is operating at a loss) is the
| value of AWS. Buyouts of public companies routinely come
| in at 20-30% above the current stock price.
| tester756 wrote:
| >of which most (possibly more than all considering that
| retail is operating at a loss) is the value of AWS
|
| I don't feel like you can draw conclusions like that, or
| you can? idk
| SkipperCat wrote:
| AWS 20% Y-o-Y growth.... My take away from this is cloud compute
| utilization is still in its infancy and will continue to grow
| faster than most sectors of the tech economy. There's still a lot
| of stuff on-prem, but new deployments are mostly cloud and that
| trend will continue.
|
| As people get more used to cloud-native deployments, they'll see
| the value in rented compute instead of leased CPUs. It just seems
| like too good of a bargain (even with the high prices of AWS) to
| use them instead of self hosting. You need less engineers, you
| get pre-built tech stacks and there is a major reduction in
| support burden.
| xkqd wrote:
| > My take away from this is cloud compute utilization is still
| in its infancy and will continue to grow faster than most
| sectors of the tech economy. There's still a lot of stuff on-
| prem, but new deployments are mostly cloud and that trend will
| continue.
|
| So what I'm curious about is whether the growth is actually in
| transitioning from onprem to cloud, or existing cloud consumers
| requiring more infrastructure.
|
| I know we've been throwing more and more compute at our
| scalability problems rather than optimizing what we have.
| kypro wrote:
| I've wondered the same. Anecdotally every company I've worked
| for in recent years made the move to cloud years ago, but
| every year they require more infrastructure.
|
| I'd actually be surprised if most of the growth in cloud was
| coming from companies migrating at this point. From my
| personal experience it would seem more likely that most of
| the growth would come from the growing demand in digital
| infrastructure, not demand for cloud per-say.
|
| > I know we've been throwing more and more compute at our
| scalability problems rather than optimizing what we have.
|
| On this point, I've noticed that cloud has made it so much
| easier to add infrastructure that companies will now do it
| without really thinking. For better or worse hardware is no
| longer the constraint it used to be.
| SkipperCat wrote:
| I think the driver is new deployments. If you're starting
| from scratch, you'll probably start with the cloud. New
| companies are created all the time and old companies tech
| ages out. I'm guessing when faced with a new deployment, the
| three main cloud vendors will be the road taken.
|
| Everything either starts or ages out at some time and is
| created.replaced with something new, and when that happens,
| its going to be in the cloud.
| StratusBen wrote:
| Everyone seems to be talking about the YoY percentage growth
| decline for AWS being at "only" 20%. Seemingly what's happening
| is just optimization en masse which is temporarily impacting
| growth on a YoY basis. There are other comments that allude to
| the on-prem to public cloud migration being in its infancy and I
| agree with that despite the growth rate decline becoming more
| noticeable.
|
| Everyone is signing up for Savings Plans and RIs. Everyone. We
| actually just released a report on this showing a steep decline
| in on-demand utilization throughout Q4 which you can see
| here...it's just amazing to see it finally popping up in earnings
| reports: https://www.vantage.sh/cloud-cost-report/2022-q4
| ericpauley wrote:
| The data on on-demand percentage change is really interesting.
| I wonder if there's some underlying correlation that causes
| people to under-estimate this transition. For instance, orgs
| using reserved instances might tend to be larger (lower
| relative usage variance) and therefore have fewer cloud
| employees per compute spend. Thus, the on-demand share weighted
| by _employees_ would actually be far larger than when weighted
| by compute spend (and making the transition less tangible to
| the hivemind).
|
| Thanks for publishing these reports! They have tons of business
| insight and, personally, I've really enjoyed reading them.
| mediaman wrote:
| Tim asks about why the $-19bn free cash flow for '22 is not a
| worry.
|
| All of this is because enormous levels of cap-ex spend: $58bn in
| net purchases of property and equipment over the year ($63bn
| gross). The other piece is $9bn in debt paydown of lease
| obligations, which is not really concerning because it's just a
| debt reduction.
|
| They don't provide much of a breakdown of this very large capex
| number. Presumably a lot of it is fulfilment center spend, but
| there's data centers, vehicles, etc., to consider as well. It
| really comes down to whether this spend is wise. If this cap-ex
| will generate strong ROI, it's fine.
| flerchin wrote:
| Tim argues that Amazon should spin off AWS, or perhaps he's
| arguing for government intervention to that effect.
|
| What do we think would happen to the retail Amazon if it did not
| have the giant profit-center of AWS? Presumably it would crumble
| under a lack of profit, or start doing the MBA thing to generally
| worsen everything to drive up the quarterly results.
| 40acres wrote:
| I don't understand the anti-trust argument against Amazon
| Retail and AWS. Amazon Retail went vertical by building their
| own cloud solution and then sold that solution to customers -
| what's anti-trust about this?
| candiddevmike wrote:
| The folks who don't have a subsidized cloud solution have to
| eat some of their margin paying for services like AWS, which
| Amazon Retail gets effectively for free/others pay for.
| 40acres wrote:
| I still don't get why it's a problem. There should be an
| advantage in taking the investment needed required to go
| vertical and leverage that for your entire business.
| [deleted]
| brianwawok wrote:
| Amazon market cap is ~1T today.
|
| How would you split that between AWS and Retail?
|
| Depending on how much of the value goes along to AWS... retail
| could look like a lot of high value / low margin businesses
| that do just fine. Obviously if you give 99% of the value to
| retail and pull the profit center, it would be bad. But that
| wouldn't happen.
| jsnell wrote:
| I don't quite understand the question. One wouldn't try to
| split the market cap. Instead you'd split the company (each
| share in Amazon becomes on share in Nu-Amazon and one share
| in AWS). The prices of those new shares will determine the
| market cap of each half.
| jjoonathan wrote:
| ...and the resulting market caps will have a ratio.
| Brianwawok was wondering what the ratio would be.
|
| If the multiples of each business were the same, we'd
| expect a roughly 75/25 split along the lines of profit, but
| the multiples are probably not the same, and that's the
| interesting part of the question. It represents market
| judgement on the future growth trajectories of e-commerce
| vs e-infrastructure.
| jsnell wrote:
| I would like to read it that way, but then the GP's "if
| you give 99% of the value to retail and pull the profit
| center, it would be bad" comment makes no sense. It is
| suggesting the value is assigned, rather than found via
| price discovery, and the assigned values would not match
| the underlying assets.
| brianwawok wrote:
| jjoonathan read it correct, you did not.
| jjoonathan wrote:
| That's a highly uncharitable reading.
| jsnell wrote:
| Again, I would love to read it some other way, but there
| is none that makes sense. In your reading, how does one
| put "99% of the value" in one part but "the profit
| center" in another?
| jjoonathan wrote:
| brianwawok's post uses the "give a value X to Y"
| colloquialism, which usually means "have an opinion that
| Y has a value of X." You seem to be reading it as "impose
| price X on Y through socialist decree," or something. I
| thought that was uncharitable.
| jsnell wrote:
| Sorry, I have never heard anyone use "give a value" like
| that. I'll trust you that it's idiomatic, but even with
| that substitution it still doesn't make sense.
|
| "Obviously if you have an opinion that retail has 99% of
| the market cap and pull the profit center, that would be
| bad".
|
| What in the world is that supposed to mean? Our opinions
| aren't going to affect the world, there will no
| consequences if somebody has that opinion. How is it bad?
| And with that interpretation, I have no idea of what
| "pull the profit center" could mean. Because that has to
| be talking about the way you split the company, not about
| an opinion you'd have.
| replygirl wrote:
| gp is basically asking what would be the price for each at
| time of split
| brianwawok wrote:
| Not quite sure how this one was so hard to parse.
|
| You don't split the market cap of a company? Really?
|
| If I have a company worth 1 billion dollars and split it
| exactly down the middle in assets and liabilities, the
| assigned value of each company is nowhere near 500 million
| dollars?
|
| Yes you will lose a little bit in terms of "lost
| synergies", but the starting point for a split (or a
| merger) is to add together or divide up the market cap.
| rhplus wrote:
| With that strategy, at the time of split you would be
| valuing them each at 50% of $1T.
| usefulcat wrote:
| You seem to be assuming that the two kinds of shares
| would or must have the same price.
| reducesuffering wrote:
| No you wouldn't. You'd have one share of AWS and one
| share of Amazon, that the market previously priced the
| sum of them as $1T. On market open, the market will have
| some volatility finding the estimated price difference
| between them, but I wouldn't expect any actual sales of
| Amazon retail at around $500b.
| slt2021 wrote:
| It depends on how would you split the corporate debt
| between the two entities. If you load up enough debt on
| AWS, and have Retail debt free and with cash - it is
| possible to have both shares valued at the same price
|
| Remember that Market cap = Enterprise value - Net debt.
|
| We can argue that enterprise value of business is
| different, but by changing net debt figure of each
| company we can make market cap of both firms equal
| ivalm wrote:
| I think the claim is that there are synergies to having both
| so the valuation of two pieces separately would be lower than
| together. How much would be this discount I am not sure.
| ghaff wrote:
| Well, it wouldn't be the "MBA thing" so much as that, if you
| want to be a public company with shareholders (or even a
| private company really) you have to have some path to
| profitability. You can't just lose money forever.
| flerchin wrote:
| Right the MBA thing is where you generally worsen things in
| search of quarterly improvement. "Yes we're making some
| money, but we could be making more money."
| dang wrote:
| Recent and related:
|
| _Amazon reports its first unprofitable year since 2014_ -
| https://news.ycombinator.com/item?id=34640922 - Feb 2023 (189
| comments)
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