Sat, May 16, 5:39 PM
- In the latest example of an Internet giant trying to move activity from partner sites/apps to its own - for another recent one, see Facebook's Instant Articles launch - Google (NASDAQ:GOOG) will soon roll out Buy buttons for search product ads that take users to a Google product page to complete their purchases. The WSJ reported in December Google had approached retailers about the idea.
- Macy's is reportedly among the retailers talking with Google about supporting the feature, which will follow the launch of Buy buttons from Facebook and Twitter. Google will store and process payment info; retailers will still handle shipping, customer support, etc. Google is addressing retailer concerns about losing access to customer data by passing on contact info users opt to provide.
- Google won't charge advertisers extra for adding a Buy button. However, it stands to profit if a faster/more convenient buying experience leads to higher conversion rates, thus compelling merchants to up their Google ad spend.
- This could particularly hold true on mobile, where small screen sizes can lead to a poor shopping experience on 3rd-party sites, and drive users to make purchases via retailer apps (thus cutting Google out). Amazon (NASDAQ:AMZN) is indirectly in the crosshairs: Google has argued Amazon is its top search rival, given the greater likelihood of Amazon shoppers to go directly to its site/apps and bypass Google search.
- Separately, the FT reports a European carrier looking to gain leverage against Google plans to roll out ad-blocking software (provided by Israeli startup Shine) to users this year on an opt-in basis. Several peers are also reportedly thinking of blocking ads.
- The effort could run afoul of European net neutrality laws and/or spark a backlash from local advertisers and publishers - French ISP Iliad/Free was forced to stop automatically blocking ads in 2013 following government pressure. It could also lead Google and other companies whose ads are blocked to retaliate by blocking their content from being delivered to a carrier's users.
Thu, May 7, 2:52 PM
- Citing enthusiasm about the AWS figures broken out in Amazon's (NASDAQ:AMZN) April 23 Q1 report, Bernstein has hiked its target by $150 to $600, while reiterating an Outperform.
- Bernstein: "[W]e were surprised by AWS's current profitability trajectory, as our assumption had been that Amazon was investing more in sales and in R&D to drive AWS's current hyper-growth." The firm thinks the numbers suggest AWS has more pricing power than previously believed, and notes Amazon has slowed its once-manic price-cutting pace over the last 12 months. "This price discipline coupled with declining costs for computing and storage explain in part the fast margin expansion we have seen for AWS starting in 2Q15."
- Amazon stated AWS had a $265M Q1 op. profit on revenue of $1.57B, and an op. profit of $680M over the trailing 12 months via revenue of $5.16B. JPMorgan responded by valuing AWS at $66B.
- Analyst Ben Thompson in a Wednesday post: "The profitability of AWS is a big deal in-and-of itself, particularly given the sentiment that cloud computing will ultimately be a commodity won by the companies with the deepest pockets ... Amazon is clearly reaping the benefits of scale from being the largest player, and their determination to have both the most complete and cheapest offering echoes their prior strategies in e-commerce."
Wed, May 6, 3:48 AM
- In an apparent shift in attitude, the FAA is planning to announce an initiative today to study drone flights beyond the sight of an operator, WSJ reports.
- Until now, the agency has virtually banned such flights, including for research, and even proposed rules earlier this year that would prohibit them.
- Both Amazon (NASDAQ:AMZN) and Google (NASDAQ:GOOG), which are seeking to use drones for package delivery, say U.S. regulators have recently become more receptive to their efforts.
Fri, Apr. 24, 12:39 PM
- Janney, JPMorgan, and Raymond James have upgraded Amazon (NASDAQ:AMZN) after the company beat Q1 estimates on the back of a 24% Y/Y increase in North American segment revenue, guided in-line, and (importantly) reported AWS had a $265M Q1 op. profit on revenue of $1.57B ($680M and $5.16B for the trailing 12 months). At least 7 other firms have hiked their targets. Amazon's market cap is at $181.6B.
- JPMorgan's Doug Anmuth (upgrade to Overweight, $535 target) now values AWS at $66.3B, or 16x estimated 2016 EBITDA. "[W]e think the reported profitability level far exceeded virtually all expectations. CSOI margins of 17% in 1Q15 and 14% in 2014 have been driven by increasing scale and greater utilization, along with additive services beyond core EC2 and S3 [computing and storage] services. When factoring in heavy depreciation, AWS has EBITDA margins of around 50%."
- Janney's Shawn Milne (upgrade to Buy): "AWS segment margins of 16.9% in Q1, 14.2% in FY14 — well ahead of general Street thoughts that AWS was in 'investment mode,' and losing 5-10% (or more)." He does note Amazon's North American retail op. margin fell to 2.5% in 2014 from 2.8% in 2013 (thanks largely to the Fire Phone debacle), but adds it rebounded to 3.9% in Q1.
- Raymond James' James Kessler (upgrade to Outperform) focuses on Amazon's total margin improvement. "Non-GAAP operating margin of 3.1% was ~100 bp above our/consensus estimates driven by improved gross margins and modestly lower than expected operating expenses. Amazon also guided 2Q margins above consensus at the high end."
- On SA, Brian Nichols argues AWS would be worth $50B at 45x forward op. income, and thinks the business could be valued at $85B if publicly traded by itself. The Panoramic View: "Facebook and other leading tech companies used to garner a 10x revenue valuation when they were in similar stages of development. I think that the same can be applied to AWS."
- On the CC (transcript), Amazon stated active customer accounts rose by 8M Q/Q to 278M (260M paying customers). Y/Y paid unit growth was steady at 20%, and 3rd-party sellers made up 44% of sales vs. 43% in Q4.
- Prior Amazon earnings coverage
Fri, Apr. 24, 9:17 AM
Thu, Apr. 23, 5:46 PM
- In its first quarter of breaking out Amazon Web Services' performance, Amazon (NASDAQ:AMZN) states the cloud infrastructure giant had Q1 revenue of $1.57B (+49% Y/Y) and (in spite of AWS' aggressive pricing) an op. profit of $265M (+8%).
- Driving the Q1 revenue beat: North American revenue (not counting AWS) rose 24% to $13.4B, with segment op. profit totaling $517M - media +5%, electronics/general merchandise +31%. On the other hand, international revenue fell 2% to $7.7B; sales would've risen 14% if not for forex. International media -12%, EGM +4% . The segment had a $76M op. loss.
- With the help of AWS and 3rd-party seller growth, gross margin rose to 32.2% from 28.8% a year ago. Fulfillment spend +19% to $2.8B, marketing +24% to $1.1B, tech/content +38% to $2.8B, G&A +31% to $427M.
- Free cash flow for the trailing 12 months rose to $3.16B from $1.94B at the end of Q4 and $1.49B a year earlier. Q2 op. profit/loss guidance assumes $600M in stock compensation and amortization costs.
- AMZN +6.7% AH to $415.95, taking out its old highs along the way.
- Q1 results, PR
Thu, Apr. 23, 5:39 PM
Thu, Apr. 23, 4:06 PM| Thu, Apr. 23, 4:06 PM | 43 Comments
Wed, Apr. 22, 5:35 PM
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Tue, Apr. 14, 2:48 PM
- "[W]e believe Amazon's (AMZN +0.6%) fulfillment strategy is helping the company deliver a superior customer experience (which should drive unit and revenue growth) while extracting optimal value from each customer," writes Jefferies' Brian Pitz. His target has been hiked by $65 to $465, and his 2016 EPS estimate to $2.46 from $1.03.
- Pitz asserts Amazon's huge fulfillment investments (often criticized over the years) enable "increasing scale efficiencies and much better control of the customer experience & service levels" relative to e-commerce rivals, and have allowed it to offer "the broadest selection of fulfillment options at the lowest prices." He also notes the spending has helped Amazon expand into local commerce (e.g. AmazonFresh and Prime Now).
- Like others, he also sees AWS (an estimated ~6% of current revenue) acting as a growth driver, and believes it has a better margin profile than Amazon overall. Pitz's target is equal to 14x his 2016 EBITDA estimate; he forecasts a 30% EBITDA CAGR from 2015-2018.
- The note comes ahead of Amazon's April 23 Q1 report. Shares blasted off in January following a Q4 EPS beat made possible by gross margin gains and slower spending growth. Fulfillment spend rose 17% Y/Y in Q4 vs. 30% in Q3.
Tue, Apr. 14, 2:54 AM
- Amazon (NASDAQ:AMZN) and HarperCollins (NASDAQ:NWSA) have reached a new multi-year publishing deal - expected to go into effect this week - that covers both print and digital titles.
- The agreement calls for HarperCollins to set the retail prices of its digital books, with incentives for HarperCollins to provide lower prices to consumers.
- In November, Amazon ended its brutal battle with Hachette over print and e-books, following a six month stand-off that battered the French-owned publisher’s sales.
- Previously: HarperCollins next to collide with Amazon on e-books (Apr. 02 2015)
Sat, Apr. 11, 7:04 PM
- Following an NYT column featuring remarks from exec Bill Hilf that that were taken to suggest HP (NYSE:HPQ) is exiting the public cloud infrastructure (IaaS) market, HP has told CRN it remains committed to the space. However, the IT giant adds (echoing Hilf's remarks) it's "not competing head-to-head with the big public cloud players," such as Amazon (NASDAQ:AMZN), Google (NASDAQ:GOOG), and Microsoft (NASDAQ:MSFT).
- HP's comments follow the February departure of top cloud exec Marten Mickos (joined via the Eucalyptus acquisition), and the splitting of his responsibilities between Hilf and two other execs. The company entered the public cloud market in 2012, and (like many other enterprise IT firms) has been a backer of the OpenStack IaaS platform (pitched as an open-source alternative to Amazon/Google/Microsoft's proprietary offerings). HP asserts it has the largest OpenStack public cloud in existence.
- HP's stance arguably highlights the challenges traditional enterprise IT names face in countering the cost and scale advantages possessed by IaaS market leaders, who have often eschewed the hardware of IT giants in favor of cheap white-label hardware produced by Asian contract manufacturers. HP has partnered with Taiwan's Foxconnn and Accton to offer white-box gear for cloud providers.
- Synergy Research estimates the broader "cloud infrastructure service" market (covers IaaS and PaaS, as well as private and hybrid clouds) grew 48% in 2014 to $16B, as more on-premise workloads get migrated to cloud environments and various cloud service providers relying on IaaS/PaaS infrastructures see rapid growth. Amazon towered over the space with a near-30% share, close to 3x that of #2 Microsoft. IBM, Google, and Salesforce (NYSE:CRM) rounded out the top 5.
Thu, Apr. 9, 7:23 PM
- Amazon Web Services (NASDAQ:AMZN) has expanded its cloud storage service lineup by launching Elastic File System, a solution that lets multiple cloud computing (EC2) virtual machines use a common file system that automatically scales as more storage is needed, and can be managed with 3rd-party tools.
- Amazon argues the solution allows entire file systems to be handled the way that individual storage objects have been through its popular S3 object storage service. It sees "content repositories, development environments, web server farms, home directories, and Big Data applications" (all of which can contain a lot of files) as potential use cases.
- Also launching: Amazon Machine Learning, a service that lets developers create predictive models leveraging large amounts of data. The service aims to put machine learning tools (an area of interest for both Web giants and many startups) within the reach of developers lacking expertise in the field. It follows the launch of Kinesis, a service that provides real-time processing of huge data streams, and Redshift, a data warehousing service.
- In addition, two previously-announced services - Lambda, which automatically runs code in response to events, and the EC2 Container Service, a management service for Docker containers (lighweight virtual machines, increasingly popular), are now generally available.
- Amazon, widely seen as having a feature set lead over cloud infrastructure rivals, had 2014 "Other" revenue (AWS-dominated) of $5.6B (+42% Y/Y). AWS revenue will be broken out by itself starting with Amazon's Q1 report.
- Prior AWS service launches: Aurora (an enterprise-class database), Zocalo (a cloud storage/file-sharing platform for corporate users), WorkMail (a cloud corporate e-mail platform)
Tue, Apr. 7, 7:13 PM
- In a sign of the times, SolarWinds (NYSE:SWI) has made its Database Performance Analyzer (DPA) app, which monitors/optimizes the performance of Oracle, Microsoft, SAP, and IBM databases, available on companies using Amazon Web Services (NASDAQ:AMZN), by far the world's biggest public cloud infrastructure (IaaS) platform.
- AWS support is one of the features provided in a DPA update that also includes the ability to simultaneously monitor hundreds of database instances (whether on-premise or in the cloud), and the ability to annotate configuration changes and link them to performance changes.
- The AWS version of DPA (monitors databases running on the platform) is available through a machine image offered on the AWS Marketplace; SolarWinds claims it can be deployed in minutes. Amazon announced last November AWS' customer base has topped 1M.
- Last June: SolarWinds buys website monitoring software firm Pingdom
Thu, Apr. 2, 5:57 PM
- Amazon.com (NASDAQ:AMZN) clashed with book publisher Hachette in a lengthy skirmish last year over e-book pricing, and now with its own contract lapsing, HarperCollins (NASDAQ:NWSA) seems ready to try wrestling with the retail giant.
- Amazon says it's offering HarperCollins the same deal that Hachette, Simon & Schuster and Macmillan recently agreed to. But HarperCollins has its own online sales operations, after a move last summer to sell most of its inventory on its site, as well as deals with Amazon e-publishing competitors.
- In the publishing clashes, Jeff Bezos has maintained e-books are too expensive; a way out in this negotiation (and considering Amazon's size, some kind of resolution seems likely) may come if Amazon agrees to loosen its tight grip on customer data.
Tue, Mar. 31, 3:16 AM
- Swiss luxury group Richemont (OTCPK:CFRUY) says it will merge its Net-a-Porter unit with Italian fashion site Yoox (OTCPK:YXOXY) in an all-share deal aimed at gaining a larger share of the fast-growing online luxury market.
- A report last week suggested that Amazon (NASDAQ:AMZN) was in talks to buy the online luxury retailer.
- Richemont said it will receive 50% of the combined entity, but its voting rights will be limited to 25% to preserve the unit's independence.
- Yoox shares are up 7.1% in Italy.
Amazon.com Inc is an online retailer. The Company sells its products through the website which provides services, such as advertising services and co-branded credit card agreements. It also offers electronic devices like Kindle e-readers and Fire tablets.
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