Nov. 4, 2014, 3:01 PM
- Google's (GOOG -0.3%) has once more aggressively slashed cloud infrastructure (IaaS) prices in an attempt to gain ground against 800-lb. gorilla Amazon (AMZN -1.1%). Price cuts covers SSD, database, disk snapshot, storage, and networking services, and range from 23%-79%.
- Google, which likely has the most infrastructure scale of any IaaS provider (if one counts its broader Web services ops), has said it wants cloud pricing to fall at a pace equal to Moore's Law; that implies a halving every 18 months. It cut prices in March for both its core computing service (Compute Engine) and other offerings, and more recently gave Compute Engine another 10% cut.
- The Web giant has also launched several new IaaS services today, with a focus on countering Amazon (widely seen as having a feature set lead) by catering to developer needs. The service getting the most attention is Container Engine, which allows users to manage and provision server clusters running Docker containers. Containers act as lightweight alternatives to virtual machines, and are quickly growing in popularity.
- Also launching: 1) Three new network connectivity options meant to improve access to Google's fiber network' Amazon and Microsoft have made similar moves. 2) New features for the recently-launched Managed VM service, which combines the software flexibility of IaaS services with the ease-of-use of the App Engine cloud app (PaaS) platform. 3) Automatic resource scaling for Compute Engine virtual machines. 4) The integration of newly-acquired Firebase's mobile/Web app developer tools.
- Amazon quickly responded to Google's March price cuts, and might do the same this time. Synergy Research recently estimated Amazon still had a 27% combined IaaS/PaaS share in Q3, more than twice that of any rival. Google was ranked #4, behind Amazon, Microsoft, and IBM.
- Meanwhile, Amazon has decided to give Prime subs unlimited cloud storage for photo backups. Before, the feature was only available to Fire Phone users.
Nov. 3, 2014, 3:38 PM
- 11 days after Amazon (NASDAQ:AMZN) disclosed its main AWS reporting segment saw revenue rise 15% Q/Q and 40% Y/Y in Q3, Synergy Research estimates the company's combined cloud infrastructure (IaaS) and app platform (PaaS) revenue share totaled 27% in Q3, still more than 2x that of any rival.
- Nonetheless, competitors are gaining ground. Synergy thinks Microsoft (MSFT +0.9%), which saw 128% Y/Y Commercial Cloud growth in Q3 (covers both Azure and other services), saw its share rise above 10%. IBM (IBM -0.1%), which reported an 80% Y/Y Q3 increase in "cloud delivered as a service" revenue, is assigned a 7% share. Google, Salesforce, and Rackspace are close behind.
- In a PR, IBM states Synergy declared it to be "the #1 hybrid and private cloud provider for the enterprise." Big Blue has committed $1.2B to building up to 15 new data centers from which to deliver IaaS/PaaS services.
- Hybrid clouds are also pivotal to Microsoft's efforts to gain ground against Amazon. Last month, the company unveiled a new hardware platform (to be sold by Dell) that can handle Azure private cloud services, and link with Microsoft's public cloud services to create a hybrid cloud.
- Synergy thinks industry IaaS/PaaS revenue rose 49% Y/Y on a rolling annualized basis, and that trailing 12-month revenue has topped $14.5B. IDC expects public IT cloud services revenue (IaaS, PaaS, and SaaS) to post a 22.8% CAGR from 2014-2018, growing from $56.6B to over $127B.
Oct. 31, 2014, 2:12 PM
- Amazon (AMZN +1.7%) will start labeling promotions on its website as "Black Friday" deals beginning tomorrow.
- The company will offer two deals of the day through December 22 and more than 15K lightning deals.
- Prime members will get the first crack at some of Amazon's promotions.
- What to watch: Most retail analysts and economists have a forecast of 4.0%-4.3% growth for holiday sales which factors in promotional activity at last year's level. Any extra discounting/promotions push from the sector could take sales below estimates.
- Related ETFs:
- ETFs: XLY, XRT, VCR, RTH, RETL, IYK, FXD, IYC, FDIS, SCC, UCC, PMR, RCD, UGE, SZK
Oct. 27, 2014, 3:26 PM
Oct. 27, 2014, 9:19 AM
- The Fire TV Stick is much cheaper than the $99 Fire TV set-top, launched earlier this year. For two days, Amazon (NASDAQ:AMZN) is selling it for $19 to Prime subs.
- Much like Roku's $50 Streaming Stick, the Fire TV stick provides Wi-Fi-based access to numerous Web video sources, and comes with a remote. Like the Fire TV set-top, it supports voice search and Whispersync. Roku, reportedly planning an IPO, maintains an edge in video content support for now.
- The HDMI stick also supports casual gaming - no word on whether it supports the set-top's optional gaming controller - and 8GB of storage. It costs $4 more than Google's Chromecast, which is focused on streaming content from a user's PCs and mobile devices.
- Per custom, Amazon hasn't broken out Fire TV set-top sales. The device has faced tough competition from Roku's cheaper hardware, and Apple's comparably-priced hardware.
Oct. 25, 2014, 4:58 PM
- Shares, -28% YTD, don't look like a good deal yet, Barron's says.
- With investor sentiment waning, shares could trade according to fundamentals over the next year, and those could continue to disappoint.
- Q3 sales hit the "midpoint" of guidance. Under normal circumstances, that wouldn't trigger a selloff, but for Amazon - a stock that trades mostly on revenue growth - "that's terrible."
- Also see: Part Of Amazon.com's Core Is Dying (Paulo Santos, Oct. 24)
- Also see: No One Wants To Hear Anything Good About Amazon, But... (Dana Blankenhorn, Oct. 24)
Oct. 24, 2014, 5:52 PM
- "Investor pessimism doesn’t seem to dampen [Jeff] Bezos’s appetite for risk. Employees unsettled by Amazon’s (AMZN -8.2%) steadily depreciating stock price are probably the only thing that can force Bezos to slow down," writes BloombergBusinessweek's Brad Stone in the wake of Amazon's Q3 miss and soft guidance.
- Stone, who wrote a popular book on Bezos and Amazon, notes declining employee stock grant values caused by investor angst over Amazon's losses could increase employee turnover, something management is unlikely to ignore. Thus, curbing spending (with the goal of boosting Amazon's shares) could go hand-in-hand with keeping needed employees happy.
- How much could lower spending boost profits? In a much-discussed September post, Benedict Evans estimated Amazon's trailing free cash flow would be around $4B (rather than a current $1.08B) if its capex/sales ratio remained at 2009 levels.
- Nonetheless, Evans defended Bezos' strategy: "Amazon has perhaps 1% of the US retail market by value ... Jeff Bezos’s view is pretty clear: keep investing, because to take profit out of the business would be to waste the opportunity ... The question to ask isn’t whether Amazon is some profitless ponzi scheme, but whether you believe Bezos can capture the future."
- The sell-side was in a less forgiving mood today: Two downgrades arrived (from Cowen and Janney), as did a slew of target cuts. Notably, analysts often expressed more concerns about Amazon's top-line growth slowdown (particularly for media and international sales) than its bottom-line pressures.
- Prior Amazon earnings coverage
Oct. 24, 2014, 1:48 PM
- RBC is out with a forecast on which studios will make the most money in 2015 from selling off-network series to SVOD concerns such as Netflix (NASDAQ:NFLX), Amazon Prime (NASDAQ:AMZN), and Hulu.
- CBS Studios (NYSE:CBS) leads the pack at $179M, while Warner Bros. (NYSE:TWX) is expected to bring in $106M and Lion's Gate (NYSE:LGF) about $61M.
- Sony Pictures TV (NYSE:SNE), Fox (NASDAQ:FOXA), and ABC Studios (NYSE:DIS) are pegged to bring in $40M-$43M.
- The overall spend of the top three streamers on older series is expected to rise 31% to $6.8B next year.
Oct. 24, 2014, 9:15 AM
Oct. 24, 2014, 12:56 AM
- "Can you tell us or remind us what financial measures are important to you guys ... it's a little hard to see any of them making positive progress," asked Wolfe Research's Aram Rubinson during Amazon's (NASDAQ:AMZN) Q3 CC (transcript), just one of several pointed questions offered.
- Bernstein's Carlos Kirjner asked about weak international margins - international op. loss rose to $224M from $28M a year ago - and why international's growth (14%) has fallen far behind North America's (25%). CFO Tom Szkutak (again) chalked up Amazon's losses to growth investments, and gave little detail about growth other than to state it "has been softer across a number of geographies."
- BGC's Colin Gillis asked why North American media growth (+5%) was the lowest in years. Szkutak mentioned Amazon is seeing a demand shift from textbook purchases to rentals (could be a positive for CHGG), and that heavy discounting last year made for tough comps.
- Total media revenue rose 4% to $5.2B vs. 10% in Q2, and total electronics/general merchandise revenue 26% to $14B vs. 27% in Q2. North American "Other" revenue (mostly AWS) rose 40% to $1.34B, and returned to positive Q/Q growth (15%) following huge price cuts earlier in 2014.
- Other details: 1) $170M in charges were taken, largely related to the slumping Fire Phone. 2) Paid unit growth was 21% vs. 23% in Q2, and 3rd-party sellers made up 42% of units vs. 41%. 3) Gross margin rose 120 bps Y/Y to 28.9%. 4) Fulfillment, tech/content and marketing spend respectively rose to 12.4%, 10.8%, and 4.7% of revenue from 11.5%, 9.2%, and 3.9% a year ago.
- Shares finished AH trading down 10.7%, making new 52-week lows along the way. Not factoring post-earnings estimate revisions, they now trade for 1.2x 2015E sales.
- Q3 results, guidance/details, PR
Oct. 23, 2014, 5:42 PM
Oct. 23, 2014, 4:17 PM
- Amazon (NASDAQ:AMZN) reports another unprofitable quarter amid strong growth and a flurry of new device releases.
- North American revenue +24.9% Y/Y to $10.301B
- International revenue +13.6% to $7.712B.
- Media revenue +4.2% to $5.244B
- Other revenue +36.7% to $1.382B.
- Fulfillment spend +29.9% to $2.643B.
- Operating cash flow +15% to $5.71B.
- Guidance: The company sees revenue of $27.3B-$30.3B in Q4 vs. $30.9B consensus. A Q4 operating loss of between -$570M and -$430M is expected.
- AMZN -8.5% AH.
Oct. 23, 2014, 4:03 PM
Oct. 22, 2014, 5:35 PM
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Oct. 21, 2014, 2:13 AM
- Amazon (NASDAQ:AMZN) and Simon & Schuster (NYSE:CBS) have signed a multi-year contract over the price of e-books, a deal that comes as the online retailer continues tough negotiations with Hachette Book Group.
- Amazon has been in a brutal battle with Hachette since the publisher's contract expired in March.
- Negotiations with Simon & Schuster took about three weeks and closed two months before the previous contract expired.
Oct. 20, 2014, 9:28 AM
- Jefferies keeps Amazon (NASDAQ:AMZN) lined up as its top large-cap e-commerce stock pick.
- The investment firm thinks the company will beat estimates this week with its quarterly report and continue the momentum through the holiday season.
- A lush price target of $435 on AMZN is still in play from Jefferies.
- AMZN -0.4% premarket to $302.20.
AMZN vs. ETF Alternatives
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 offerselectronic devices like Kindle e-readers and Fire tablets.
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