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  • Even With Higher Margins, Amazon Wouldn't Be Cheap [View article]
    <<<Of course, it isn't Amazon's retail business that really has people excited. That honor belongs to Amazon Web Services, the cloud business. That business is growing rapidly, on pace for about $7 billion in sales this year at a margin of about 25%.>>>

    Talk about funny numbers. The $7 billion of revenue is correct but the 25% is imagined. The company reveals for AWS the Operating Income (which is before taxes and interest) and it is non-GAAP to boot. The GAAP stock based comp expense is ignored.

    The company as a whole only earned around $320 million last year, 70 cents times 468 million shares. So it seems unlikely they could have netted 25% on $7 billion of AWS revenue.
    Nov 6, 2015. 03:52 PM | 10 Likes Like |Link to Comment
  • Even With Higher Margins, Amazon Wouldn't Be Cheap [View article]

    I think Amazon's biggest problem in the short run is the $1.60 earnings estimate for this quarter. How does this company go from earning 45 cents in Q4/2014 to a $1.60?

    My guess is at the current price of about $650, a stock split will happen. So if they do an 8 to 1 split, the $1.60 becomes 20 cents and then earning a dime will not look too bad.

    Lots of funny numbers!
    Nov 6, 2015. 03:34 PM | 7 Likes Like |Link to Comment
  • Chevron's Earnings Were Crucial For The Entire Energy Sector - Here's Why [View article]

    Here is the link to GS talking about $20 oil.
    Nov 1, 2015. 10:19 AM | Likes Like |Link to Comment
  • Amazon's Headline Numbers Don't Begin To Tell The AWS Story [View article]

    I wonder how many people understand that Amazon's Operating Income is before the GAAP expense, stock based compensation so it becomes non-GAAP Operating Income. And then Operating Income is before the net interest expense (growing with the debt) and income tax.

    I guess there is no reason to get into the financials too closely any more.
    Oct 28, 2015. 08:34 AM | 3 Likes Like |Link to Comment
  • The Netflix And Wal-Mart Debacles Will Hit Amazon [View article]

    Amazon earned 45 cents in Q4/2014.

    Amazon's most profitable quarter was Q4/2010 when they earned 91 cents. Plus in Q3/2010 Amazon earned 51 cents.

    The current Q4 earnings estimate is $1.61.

    Where will this dramatic increase come from? And if the increase is in some change in the model, why is Q3 still estimated to have a loss?

    Thank you,

    Oct 15, 2015. 10:12 AM | 3 Likes Like |Link to Comment
  • Wal-Mart sits at multi-year low after guidance stuns [View news story]
    Walmart is competing with possibly the largest company by market cap in the history of finance that has a business model designed to sell products at a net loss.

    Hard decision on Walmart's part to engage but I guess if they do not compete the alternative could be worse. Odd that Walmart (like me in this comment) does not mention the competitor?
    Oct 14, 2015. 11:40 AM | 2 Likes Like |Link to Comment
  • Can Amazon Repeat Its Last Earnings Performance? Doubtful [View article]
    <<<Overall AWS revenue climbed to $1.82 billion for the quarter ended June 30, up 81 percent, while operating income was at $391 million, a gain of 407 percent. It has an operating margin of 21.4 percent.>>>

    There are two major deceptions with these numbers.

    The first deception is this is Operating Income, which does not include interest expense or income tax. Interest has nearly tripled because of the dramatic increase in debt (both the bonds and the capital leases) in the last few years. Plus most of this debt/interest is on the servers to support AWS.

    The second deception is the Operating Income (that is reported for AWS but not the business as a whole) is a non-GAAP number as it does include the Stock Based Comp. I do not understand how the company gets away with this one.

    This emperor might really have no clothes.
    Aug 2, 2015. 08:36 AM | 6 Likes Like |Link to Comment
  • Amazon Setting Another Bear Trap? [View article]
    Nice article. Well done and balanced. You presented both sides well.
    May 27, 2015. 09:35 AM | 4 Likes Like |Link to Comment
  • Why Thinks It Is So Valuable [View article]

    What I do not understand is:

    Customers love the software....I think that is pretty much a given.

    The company had a $263 million GAAP loss in 2014 (GAAP dictates they had to expense the $565 million of stock comp).

    Why can't the company charge more for the software and make a profit?
    May 26, 2015. 10:01 AM | 2 Likes Like |Link to Comment
  • Why Is Only Worth About $40 Billion To Bidders [View article]
    The company announced yesterday GAAP earnings of one cent....a penny.

    Read the transcript. All the gushing analysts acted as if the company founded ways to eliminate global warning, terrorism and all disease.
    May 21, 2015. 03:40 AM | 5 Likes Like |Link to Comment
  • Chevron, Sharply Negative Cash Flow, Dividend Under Threat [View article]
    Did the author of a close to inane article even bother to look at the balance sheet?

    I think a barrel of oil dropped to close to $42 a barrel in Q1. Not only did the company earn a GAAP profit greater than the dividend but they increased equity by almost $800 million. Pretty amazing quarter in my mind.

    As an aside WTI is currently trading at $61.06 a barrel. This article would make better sense if a well head blew up and was spewing oil all over the Florida Keys.
    May 6, 2015. 12:31 PM | 4 Likes Like |Link to Comment
  • Update: Amazon Will Report Amazon Web Services Numbers Next Quarter [View article]

    Thank you for the comment.

    I also use RackSpace as a tool to evaluate what AWS might be worth if AWS was broken off.

    RackSpace which is estimated to have $2 billion in revenue in 2015 has a current market cap of $6.5 billion.

    The problem is Rackspace is currently profitable and Amazon is not.

    I believe AWS as a stand alone company is the most valuable piece of the Amazon conglomerate. But again Amazon is not profitable. So if AWS was say as profitable per revenue dollar as RackSpace, the Amazon without the AWS piece, would even be less profitable than it is now.

    The emperor has no clothes.
    Feb 1, 2015. 04:38 PM | 4 Likes Like |Link to Comment
  • Update: Amazon Will Report Amazon Web Services Numbers Next Quarter [View article]
    Amazon has no P/E and not a sky high P/E as you said.

    In order to have a P/E, a company needs to have earnings. Amazon lost 52 cents in 2014. When you divide a positive number (price) by a negative number (earnings), you get no result.

    Moving on to forward earnings, the average earnings estimate for Q1 and for Q2 is a loss also. So we can assume Amazon will also have no earnings in 2015 and also have no P/E in 2015.

    AWS is in North American Other not Other, which includes International Other.

    AWS is in a massive price war with MicroSoft, Google and IBM. We do not know if AWS is profitable and we also do not know what breakdown will be given on AWS. The only thing that may be given is revenue.
    Feb 1, 2015. 09:47 AM | 8 Likes Like |Link to Comment
  • My Take On's Q4 2014 Earnings [View article]

    That was an excellent point subtracting the increase in working capital.

    Your number gives a lot more weight to the point I was trying to make.

    Calculating cash burn is a pretty tricky exercise but NYer1's modification to a $6.6 billion number might be pretty close to what I was looking for.

    GREAT JOB !!
    Jan 31, 2015. 03:38 PM | 1 Like Like |Link to Comment
  • My Take On's Q4 2014 Earnings [View article]

    The bonds were not negatively affected by the release.

    The coverage ratio is very simple. EBIT.

    The bonds easily met the coverage ratio.

    Staying on the bonds, the guidance, as Paulo said was not good.

    My guess is the company has losses in Q1, Q2 and Q3 and may not meet the coverage ratio. The I in EBIT will become relevant because the interest will grow in 2015. Then we might expect a downgrade depending on the size of the EBIT differential.

    But remember these bonds, which have yields set for the duration of the bonds, compete with yields at a certain period of time. So if you ask your question after Q3, I would for my own objective, have an answer for you.
    Jan 30, 2015. 05:35 AM | 5 Likes Like |Link to Comment