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Why are Amazon's (AMZN -10.3%) operating income and margins diving? Ramping Kindle production is...

Why are Amazon's (AMZN -10.3%) operating income and margins diving? Ramping Kindle production is one factor (the devices are loss leaders), but the company's long-term investments are a bigger one. As Erick Schonfeld notes, Amazon's Q3 spending on "technology and content" rose 74% Y/Y, and its spending on "fixed assets" doubled. (transcript)
Comments (4)
  • Canary Cash
    , contributor
    Comments (471) | Send Message
     
    Which means AWS is going to get even more competitive I imagine.
    26 Oct 2011, 09:40 AM Reply Like
  • Dana Blankenhorn
    , contributor
    Comments (5685) | Send Message
     
    Clouds are capital expenses that pay for themselves over time. You're building something big in order to rent it. How quickly can that investment be depreciated -- how quickly must it be depreciated -- is the key question. The fact that the investment must be made to take advantage of market opportunities should not be open to question.

     

    Buy AMZN after all the "oh noes" are exhausted and the stock settles down.
    26 Oct 2011, 09:44 AM Reply Like
  • mogando
    , contributor
    Comments (313) | Send Message
     
    amazon should sell a ton of Kindle Fire at $199 so their margins (after marketing and R&D) goes to zero (i'm long AAPL anyway)
    26 Oct 2011, 09:45 AM Reply Like
  • Dana Blankenhorn
    , contributor
    Comments (5685) | Send Message
     
    I bought a new Kindle reader for $109 (to get the ads off). And I'm sure we'll be buying books for it over time that will make it profitable to Amazon.

     

    Now will the Fire do as well? That may be a more open question.
    26 Oct 2011, 09:47 AM Reply Like
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