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Investors Aren't Buying the Amazon Fairy Tale Anymore.
Amazon wants to dominate (and go after the grocery market now, as well) and whenever it gets to that point - and who knows where the flexible goalposts are currently placed in regards to that goal - it can raise prices as it pleases. They've also made mistakes - they're sitting on $80+million in fire phones that are unsold and wrote off something like $170M on costs in addition to unsold inventory.
If you invested years ago, you're happy (although you were happier not that long ago.) If you invested a year or so ago, not happy. Amazon isn't transparent and I don't think they particularly care about shareholders. I do wonder if the stock drops enough will Amazon pull a Whole Foods, whose CEO John Mackey famously didn't care about shareholders and made controversial statements until they made someone else a very shareholder-friendly co-CEO and now you barely hear from Mackey.
In terms of Amazon, it's been this way for many years. Amazon isn't going anywhere, but it becomes maybe investors really re-think what is an appropriate valuation. Amazon also needs to be a little more transparent - a detailed longer-term plan would likely put a lot of people at ease that there is some vision as to where the company is headed.
I agree shareholders would like to see some visibility here. Also I keep reading stories how Amazons retail operations are having troubles with increasing fake and counterfeit items. The Chinese are getting better at it. It has become more like EBay.
I agree shareholders would like to see some visibility here. Also I keep reading stories how Amazons retail operations are having troubles with increasing fake and counterfeit items. The Chinese are getting better at it. It has become more like EBay.
I've read quite a few stories about that, as well, and you see it - especially if you look for things like cell phone accessories.
Reminds me, I'd be curious about how Amazon's FireTV is doing. Another example of why wouldn't someone get an Apple TV or comparable product instead for the same price. FireTV plays basic games, but if someone's going for games, they're going to get an XBOX One or PS4, which I think are both rather remarkable leaps over the prior generation systems.
You look at the XBOX One for example, though, and you really see yet another media product moving away from physical. They make it very easy (although admittedly lengthy, depending on your internet speed) to purchase and download games to your system, including weekly deals. I can see them offering more and more in the way of extras to attract players to downloading games vs buying physical games.
I continue to think that eventually (and maybe it's not going to happen completely this generation, but absolutely by next generation), Games as a physical media will likely end. Gamestop - which I don't have anything against - is then irrelevant. XBOX Live is a tremendous service for Microsoft, and why would they need a middleman like Gamestop? Best Buy will also probably not even have a physical media department in the years to come.
From Amazon's quarter (which showed a continued slowdown in media sales):
"Colin Gillis - BGC Financial
Great. Thanks for taking my question. So just to get back to that North American media sales, what's the lowest growth rate in over 20 years -- are there - or 20 quarters, are there other factors beyond the text book shifts and sort of the Q3 strength last year? Are the digital media trends still intact?
Tom Szkutak - CFO
In terms of the principal drivers -- it's the two that I mentioned. So it's the text books rentals and also overlapping some of the strong discounting and strong titles that we had in some categories. So it's across a number of categories within media, but those are the two principle drivers.
Colin Gillis - BGC Financial
And you don't see this as a broader shift in that number?
Tom Szkutak - CFO
No, we're -- there's still both in terms of North America and international, there is certainly a shift that's going on from physical to digital and that's something that we're spending a lot of time on and trying to improve the experience for customers and we've been able to do that certainly over a period of time and so it's something we'll continue to work on."
For Amazon, I think they have to focus on their core infrastructure. I'd have much more confidence in Apple or Google to make great leaps into new products.
In terms of mutual funds, I think it's the idea of how well does a fund manager anticipate changes in consumer trends and act upon it. It's clear that there is a change in moving towards digital over physical (as much as I don't like that in terms of media) and how does one invest accordingly?
In recent years Amazon is became less relevant for us as consumers. We now shopped less than 10% than we used to.
Hardware they made, Kindle Fire and Fire phone, are barely competitive both in price and functionality. We have both Android and iOS tablets and phones. Amazon failed in both devices for us.
Comments
Regards,
Ted
http://investors.morningstar.com/ownership/shareholders-major.html?t=XNAS:AMZN®ion=usa&culture=en-US&ownerCountry=USA
If you invested years ago, you're happy (although you were happier not that long ago.) If you invested a year or so ago, not happy. Amazon isn't transparent and I don't think they particularly care about shareholders. I do wonder if the stock drops enough will Amazon pull a Whole Foods, whose CEO John Mackey famously didn't care about shareholders and made controversial statements until they made someone else a very shareholder-friendly co-CEO and now you barely hear from Mackey.
In terms of Amazon, it's been this way for many years. Amazon isn't going anywhere, but it becomes maybe investors really re-think what is an appropriate valuation. Amazon also needs to be a little more transparent - a detailed longer-term plan would likely put a lot of people at ease that there is some vision as to where the company is headed.
Reminds me, I'd be curious about how Amazon's FireTV is doing. Another example of why wouldn't someone get an Apple TV or comparable product instead for the same price. FireTV plays basic games, but if someone's going for games, they're going to get an XBOX One or PS4, which I think are both rather remarkable leaps over the prior generation systems.
You look at the XBOX One for example, though, and you really see yet another media product moving away from physical. They make it very easy (although admittedly lengthy, depending on your internet speed) to purchase and download games to your system, including weekly deals. I can see them offering more and more in the way of extras to attract players to downloading games vs buying physical games.
I continue to think that eventually (and maybe it's not going to happen completely this generation, but absolutely by next generation), Games as a physical media will likely end. Gamestop - which I don't have anything against - is then irrelevant. XBOX Live is a tremendous service for Microsoft, and why would they need a middleman like Gamestop? Best Buy will also probably not even have a physical media department in the years to come.
Elsewhere, downloading music is apparently going out of fashion (Apple buying Beats for its streaming service and rebranding it) as people stream it instead.
http://www.huffingtonpost.com/2014/10/24/downloading-music-fashion-streaming-services_n_6043924.html
From Amazon's quarter (which showed a continued slowdown in media sales):
"Colin Gillis - BGC Financial
Great. Thanks for taking my question. So just to get back to that North American media sales, what's the lowest growth rate in over 20 years -- are there - or 20 quarters, are there other factors beyond the text book shifts and sort of the Q3 strength last year? Are the digital media trends still intact?
Tom Szkutak - CFO
In terms of the principal drivers -- it's the two that I mentioned. So it's the text books rentals and also overlapping some of the strong discounting and strong titles that we had in some categories. So it's across a number of categories within media, but those are the two principle drivers.
Colin Gillis - BGC Financial
And you don't see this as a broader shift in that number?
Tom Szkutak - CFO
No, we're -- there's still both in terms of North America and international, there is certainly a shift that's going on from physical to digital and that's something that we're spending a lot of time on and trying to improve the experience for customers and we've been able to do that certainly over a period of time and so it's something we'll continue to work on."
http://seekingalpha.com/article/2594095-part-of-amazon-coms-core-is-dying
For Amazon, I think they have to focus on their core infrastructure. I'd have much more confidence in Apple or Google to make great leaps into new products.
In terms of mutual funds, I think it's the idea of how well does a fund manager anticipate changes in consumer trends and act upon it. It's clear that there is a change in moving towards digital over physical (as much as I don't like that in terms of media) and how does one invest accordingly?
Hardware they made, Kindle Fire and Fire phone, are barely competitive both in price and functionality. We have both Android and iOS tablets and phones. Amazon failed in both devices for us.