Tuesday, July 31, 2018

"This is the Amazon everyone should have feared — and it has nothing to do with its retail business" (AMZN)

Just to hammer the point home.

From Recode:
The fast, profitable growth of the online commerce giant’s cloud computing and ad businesses should scare rivals.

Amazon’s $52.9 billion of revenue in the second quarter of the year came in a tad below what Wall Street analysts expected — and that doesn’t matter whatsoever.

That’s because the massive online retailer once again posted its largest quarterly profit in history — $2.5 billion for the quarter — on the back of two businesses that were afterthoughts just a few years ago: Amazon Web Services, its cloud computing unit, as well as its fast-growing advertising business.

An Amazon that is posting growing profits from its non-core business means an Amazon that can continue to keep prices low and invest in ever-speedier delivery times to widen its defensive moat in its main retail business. That should be a very scary realization for rivals. 

Here’s another: Those two highly profitable businesses, AWS and the ad business, are showing little sign of slowing down. AWS revenue growth accelerated in the second quarter, rising 49 percent year over year....MORE

July 27 
"Amazon ad sales top $2 billion, its fastest-growing segment" (AMZN)

July 27
"Every major Wall Street analyst on the internet giant's earnings report" (AMZN)
We'll be back with more about why we focused on the cloud stuff in yesterday's "Ahead of Amazon's Earnings: I've Looked at Clouds From Both Sides Now (AMZN; GOOG)". For now this segment information from the Q2 press release is the TL;DR:

Operating income: AWS  $1.642 billion
Total operating Income  $2.983 billion
Yes, the cloud business accounted for 55% of the company's operating income.
July 26
Ahead of Amazon's Earnings: I've Looked at Clouds From Both Sides Now (AMZN; GOOG)