Hochfeld on Amazon

Investment Analysis Clubs Saul’s Investing Discussions
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http://seekingalpha.com/article/4042728-amazon-good-bad-ugly…

a must read for AMZN investor

.So why is growth slowing? Because at a $14 billion/year run rate, the law of large numbers is in evidence
I think it is reasonable to assume that percentage growth rates continue to moderate over the next several years and that is, I imagine, a pretty consistent theme in the expectations of both analysts and investors. Moderate is a subjective word. My thoughts are that percentage growth rates will decline 5-10 percentage points a year on average for several years to come but will still show growth that would make almost any other business green with envy.

This is a company with the opportunity to grow free cash flow very rapidly and to support significantly higher valuations for some time to come. The potential for positive alpha, while no doubt less in percentage terms this year than last year, remains substantial.

Overall, I find it hard not to expect that Amazon will continue to confound skeptics for many years to come.

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from the comments, some bullish remarks
AWS: Only 10% of corporate data center workloads have migrated to the cloud thus far.

It will be hard simply because of cost, not to migrate workloads to the cloud.

Amazon Fulfillment Services: Another progressive service that could drive growth by displacing traditional competitors. Like AWS, Amazon allows any merchant to use their fulfillment services. Any or all of warehousing, packing, shipping, and local customer support.

and a bearish one

.India is not an opportunity. It’s a sink hole that could swallow a lot of cash. Moving into India is an indicator of the lack of other retail opportunities.

I may agree with this one.Which US companies have made big bucks in India?

https://hbr.org/2014/12/how-u-s-businesses-can-succeed-in-in…

Is an Indian project much like stock buy-backs, sign that a company has more money than imagination? India is a poor country with weak infrastructure and a large often obstructive bureaucracy. Lots of people there, but how well can they be reached by an American company?

I am unhappy with Bezos venture into partisan politics. Annoying the President of the US and half of your potential customers does not make good business sense to me. While it might make him feel good personally, I can see no upside for me as a shareholder.

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I am unhappy with Bezos venture into partisan politics. Annoying the President of the US and half of your potential customers does not make good business sense to me. While it might make him feel good personally, I can see no upside for me as a shareholder.

It worked for President Trump. Maybe Bezo’s is going to run for President.

Andy

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The company beat earnings expectations but missed revenue growth expectations for the 2nd quarter in a row.

No! The analysts were wrong for the 2nd quarter in a row. :wink:

Denny Schlesinger

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I am unhappy with Bezos venture into partisan politics. Annoying the President of the US and half of your potential customers does not make good business sense to me. While it might make him feel good personally, I can see no upside for me as a shareholder.

Are you unhappy with the position he holds or unhappy with it as it may impact the business? If you’re honest you’ll recognize that Walmart was engaged in partisan politics for many years before Amazon starting eating their lunch. Did that make you unhappy as well?

Name a big US company not involved with partisan politics . . .

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<Name a big US company not involved with partisan politics . . .>

Point is that CEO’s like Bezos and several others especially of late flaunt and push their political views. I own and have owned stock in many large companies where that is not the case at all. Irregardless which political party the CEO is very vocally opposing or supporting I strongly believe it is not a wise business move in any case. I own a small business in a rural area. I was born or have developed enough common sense not to alienate my customers by flaunting my political views to them in the way that Bezos and others are doing. I own some amazon, I will not sell simply because of this but I will say it is one of the factors that will effect my decision. In fact in the past I have sold companies for their very outspoken political views.

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Point is that CEO’s like Bezos and several others especially of late flaunt and push their political views.

Either you believe in freedom of speech or you don’t. I haven’t ever boycotted a company for what the CEO believes, although I am sure there are people that have. I also think that if a CEO believes strongly enough in their convictions then it is their duty to speak up. Their have been many company CEO’s that have spoken up (Uber, Home Depot, Yuengling, BRK.A, SBUX, TGT, Chik-fil-a, Hobby lobby, Amzn. ) to name a few.

I can understand Soy why someone should not flaunt their beliefs, but to make a firm stand on your beliefs, is an admirable trait no matter what your beliefs are. Some people think that a firm stand is flaunting when in reality it is just a firm stand. I am sick and tired of all the Hyper-politics on both sides of the aisle.

Andy

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Yes, but is the CEO speaking up for selfless purposes or to further corporate goals. As an example, abuse of the H1-B program, or government subsidies, government regulations to keep smaller competitors out, more complicated financial regulations to make it too expensive and cumbersome for competitors to comply with. Is it for or against fair use on the internet or not, or how about, like with Boeing, the Iran deal. Funny how Obama was so insistent on getting the Iran deal done no matter what. It is as if he was ready to give away and concede almost anything to do so.

Boeing, supportive. What did Boeing get, why don’t you Google the new orders Boeing got from Iran shortly after the Iran deal…

It is called crony capitalism. It is not corporations speaking up for a better America, but to gain corporate advantage. This rule by the elite, by use of political contribution, kick backs, offers of jobs in the future, speaking engagements (Hillary Clinton was paid more than $21 million in one year for 30 minute speeches by Wall Street banks), is a strong part of what put Trump into office. Like him or hate him, this crony capitalism, that has always existed, but has become progressively worse as government gets bigger and bigger (as it creates more and more, what economists call, "rent seeking opportunities) has created an environment of the “elite” and then the rest of us.

So from this context, yes, I do not want corporate leaders speaking from the position of authority (they work for shareholders, and shareholders are not political organizations and have a diversity of personal political views) in regard to politics. When in the end, like Boeing, it is nothing more than naked corporate self-interest, never mind $150 billion given to the leading sponsor of terrorism in the world, working to get an atomic bomb, and flying missiles capable of carrying it. We got ourselves a good contract!!!

Tinker

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Yes, but is the CEO speaking up for selfless purposes or to further corporate goals.

I do not see why this even matters. I have never seen a post of yours Tinker that was selfless. If everyone was being truthful we all speak to our best interest. If the CEO is speaking for corporate goals then they are looking out for the best interest of the shareholders

Funny how Obama was so insistent on getting the Iran deal done no matter what. It is as if he was ready to give away and concede almost anything to do so.(Hillary Clinton was paid more than $21 million in one year for 30 minute speeches by Wall Street bank)

This is my whole point about Hyper-politics. This would have been more believable if you would have given examples of both parties getting kick backs.

So from this context, yes, I do not want corporate leaders speaking from the position of authority (they work for shareholders, and shareholders are not political organizations

Well that is were we have two very different viewpoints. I believe everyone has a right to their opinion and just because they are corporate leaders does not mean that their voice should be silenced. If I thought like you then Trump would never have been elected.

Andy

Tinker

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I can speak for myself. A CEO speaks for countless others who do not necessarily agree with him. And when he or she speaks for corporate goals they do so by deceit, feigning selfless interest while lobbying for a profit, even if it is knowingly against national interests and purely influence peddling.

If you favor such deceit by the elite, I will not even pretend to understand why.

Tinker

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I can speak for myself. A CEO speaks for countless others who do not necessarily agree with him. And when he or she speaks for corporate goals they do so by deceit, feigning selfless interest while lobbying for a profit, even if it is knowingly against national interests and purely influence peddling.

If you favor such deceit by the elite, I will not even pretend to understand why.

Tinker

Tinker, You are CEO that runs his own business. You have employees that count on you. So how are you any different than the CEO’s that you despise.

Andy

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Andy,

I don`t despise CEOs. I am all for them. What I do not like is duplicity.

And quite frankly, you don`t know squat about me, or you would understand that I say what i mean and feel, and what I think is best for the country, not for my company, or my self-interest, other than it relates to my children growing up in America.

Might explain why I don`t have any sweetheart government contracts, or plum government posts.

Lobbying for a company’s self interest is a lot different from partisan bickering. The problem is that partisan bickering has become the currency to receive one`s goal of influence peddling. Boeing is probably the largest contract example of this, worth tens of billions of dollars. There are few legitimate people in the field who can actually say that the Iranian nuclear deal was much else other than a pay off. More than $1 billion was secretly paid in cash on pallets! Come on! And now we can see why. This is but one example.

You like the Iran deal, then more power to you. Yes, it will create jobs in America. But it was not a deal that was honestly sold, or done, or honestly disclosed. And in the end, it looks very much like it was done, not to stop any nuclear development in Iran (which is it is clearly not doing) but to obtain billions in corporate contracts. Heck, Iran could have purchased from Airbus, but suddenly it is Boeing.

That is called crony capitalism.

But enough, that is but one example. As long as the company you own rakes in the profits, as a matter of stock price, it won`t matter an ounce. I just hate the duplicity and dishonest of it.

Tinker

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THIS THREAD IS TURNING INTO AN AGGRESSIVE ARGUMENT WITH POLITICAL OVERTONES instead of a discussion about Amazon and its prospects. PLEASE DROP IT!

Thanks,

Saul

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More than $1 billion was secretly paid in cash on pallets!

Just how big a secret was it if you can report on it on this board? Fact is, it was closer to $1.5B which represented the approximate value of liquid Iranian assets which had been frozen by the lifted sanctions. It was not a covert pay-off (although also not well publicized). Not some under the table secret deal, etc. But maybe you didn’t read about that depending upon which news sources you trust.

As for Boeing (a company with which I have more than a passing knowledge of) engaging in “crony capitalism” well big surprise. Then there’s Lockheed, General Dynamics, GE, etc, etc, etc. But, BTW, the Iranians also bought 100 planes from Airbus. Keeping their option open. Just like the Chinese buy from both vendors.

But given all that duplicity if that’s what you want to call it (I liken it more to like real world BIG business - Boeing has more annual revenue than a lot of countries annual GDP). It’s also off topic.

The issue started out to be Bezos speaking his mind, and what impact that might have on the business of Amazon. You seem to be of a mind that if a CEO ever takes a political stand of any sort whatsoever, s/he runs the risk of alienating customers, and it is therefore bad for business, hence, bad for stockholders.

I think you will be hard pressed to cite many real life examples where this is true, using your word “irregardless” of which side of the political spectrum they happen to be on. For example, Chick-Fil-A, Hobby Lobby, Starbucks, Apple to name only a very few from both sides of the spectrum. The argument is meaningless because if you ask most people who the CEO of any of these companies is they’ve not a clue. The general population doesn’t pay attention, in fact, probably doesn’t even know what “CEO” stands for.

It’s a business irrelevance.

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Sorry Saul, we must have cross posted time-wise. But basically I was saying that the politics of the CEO are irrelevant to the business in any case. How many people in the general public know who is CEO of what? Remarkably few. For that matter, how many people could name the VP of the USA? I be surprised if it were even 25% (it was about 15% for Biden).

Most people don’t pay attention to this stuff and even fewer make their patronage decisions based on the asserted political views of a corporate leader. It’s just irrelevant.

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using your word “irregardless”

“Irregardless” sounds like a double negative to me, the “ir” at the beginning and the “less” at the end being negatives (of sorts).

The Grammarian

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Lobbying for a company’s self interest is a lot different from partisan bickering. Yes lobbying on issues that affect the company directly is unfortunately necessary.
But lobbying on general issues or attacking politicians on issues that are personal is another matter. Especially when you do it very publically. Because you are then doing something conflicting with many of your shareholders, theoretically your boss.

And as a customer, companies attacking non company issues makes me less likely to buy their products. Look at the Target boycott- I know two former Target customer who no longer shop there. And it was unnecessary, Target management could have quietly instituted their bathroom policy. So did the CEO act in his stockholder interest? No. It didn’t affect my buying ,but then I never have liked shopping at Target.

Trump had no public stockholders and was thus free to express his controversial opinions on a wide range of subjects. Not so Bezos. AMZN is public.

And somehow I have the sneaking suspicion that you don’t get to be a billionaire by spending much time thinking about the overall good of others. And that being a billionaire with your own private jets and bodyguards and pet congresspersons does not sensitize you or put you on the same side as the masses of average guys.

" Looking out for #1" applies here too. Whether #1 is the company or the CEO personally can be hard to determine, and neither may reflect what is good for the country.

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.Which US companies have made big bucks in India?

Why does it have to be a “US” company? Maybe others have discovered the secret sauce that “US” companies have not.

But. Google. InfoSys. Facebook. Apple. Caterpillar. Colgate Palmolive. EDS. IBM. American Express. Federal Express. And lots of others.
https://www.google.com/url?sa=t&rct=j&q=&esrc=s&…

Of course some “US” companies have just tried to lift their American products into this foreign market and have failed. GE has had both successes and failures, as have Coke, Pepsi, and others. But generally it’s a huge market with a monied class, aberrant regulation in most sectors, and a vast underclass. That makes for “challenges” but hardly “impossibility.”

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InfoSys

I am sure you know, Infosys is a company started in India primarily to serve offshore markets.

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On the India thing - you need to be in India to believe the success of Amazon. I was there this December and it is growing like weeds. Amazon says they now have an order from 97% of postal codes in India. That is truly spectacular for a country with the complexity of India. I in fact used my US prime membership to buy a smartphone for my dad in India through Amazon India. I did not want to take the trouble of driving to local electronic shop.

At the start of the decade, many Indian companies tried to do a Walmart in India and had very limited success, primarily due to the high cost of real estate. They have completely missed the bus on online. Amazon does not need to invest heavily in land. Also I believe local online competition Flipkart does not stand a chance against Amazon’s deep pockets.

But Amazon needs to be careful to take traditional mom and pop shops along in this journey. An estimated 50-100 million people across India are employed by traditional shops. If there business gets impacted, there will be political backlash - and understandably so.

So far they are approaching it sensibly:
http://blogs.wsj.com/indiarealtime/2014/04/29/amazon-tests-m….
http://time.com/4107649/amazon-udaan-stores-india/

On the other hand it is also a huge opportunity and boon to many small entrepreneurs -suddenly they can sell their wares across India and the World.
http://www.rediff.com/business/special/special-how-small-ent…

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