The article I choose for analysis was written in two parts, and it was published by Forbes magazine on December 11th and 12th of 2014. In part one of the article, Forbes explores the principal reasons behind Amazon’s low margins. The second part of the article Forbes assesses whether Amazons profitability situation could improve and by how much through 2017. I was attracted to this article because over the course of my research the main complaint leveled against Amazon was their lack of profitability. I found the topic extremely relevant in regards to their long range vision which is so much different than other organizations.
Over the last two years, Amazons operating margins have fallen to under one percent. This has obviously worried …show more content…
He preached a far different vision than the typical Dotcom’s of the day, those who were obsessed with appeasing stakeholders in the moment instead of looking to the future. No matter how much investors whined that he was spending too much money. No matter how many articles were written saying Amazon would fail. Jeff Bezo’s kept to his vision of tomorrow. It’s been almost eighteen years since Amazon went public, and they are still playing the long game. Amazon investors may have never seen a dividend, but investors who forked over $1000 dollars at the time of the IPO, would have seen that initial investment turn into more than $280,000. So while Amazon may not be issuing quarterly checks, their investors have seen their wealth increase dramatically. However, a real threat to the long term stability of that wealth, is Amazon’s declining profitability. At some point the lack of profitability will begin to affect Amazon’s stock price. How much longer until Wall Street’s confidence in the Amazon growth machine begins to wane. Investors may decide that pouring money into a non-profitable entity isn’t the best way to invest their money and go elsewhere. This could start a negative chain reaction that could lead to the company’s demise. A major piece of the Amazon business model is market share, and a “sagging stock price makes it harder to attract new talent, invest in …show more content…
The debacle that was Amazon Fire was a huge hit to organizations future in hardware. The failure of the device to handle simple applications eroded many of those who were unfortunate enough to purchase the phones confidence in the Amazon brand. While I get the Amazon strategy with Amazon Kindle, Amazon Fire Phone, and Amazon Fire TV. You sell the hardware, and offer content for those devices in the form of a monthly subscription form. This is a strategy perfected by Apple. However, with the Fire Phone, Amazon entered a market that is highly competitive, and littered with established Smartphone manufactures. The chance of establishing foothold at this juncture was small. Even with this initial failure Jeff Bezo’s is not ready to give up on the Fire Phone. At the Business Insider conference this past December Bezo’s said, that some technologies “take iterations” to get right and that "With the phone I just ask you to stay tuned” (Tam). Throwing more money at a product that had the company taking a 170 million dollar last quarter could certainly hurt investor
Over the last two years, Amazons operating margins have fallen to under one percent. This has obviously worried …show more content…
He preached a far different vision than the typical Dotcom’s of the day, those who were obsessed with appeasing stakeholders in the moment instead of looking to the future. No matter how much investors whined that he was spending too much money. No matter how many articles were written saying Amazon would fail. Jeff Bezo’s kept to his vision of tomorrow. It’s been almost eighteen years since Amazon went public, and they are still playing the long game. Amazon investors may have never seen a dividend, but investors who forked over $1000 dollars at the time of the IPO, would have seen that initial investment turn into more than $280,000. So while Amazon may not be issuing quarterly checks, their investors have seen their wealth increase dramatically. However, a real threat to the long term stability of that wealth, is Amazon’s declining profitability. At some point the lack of profitability will begin to affect Amazon’s stock price. How much longer until Wall Street’s confidence in the Amazon growth machine begins to wane. Investors may decide that pouring money into a non-profitable entity isn’t the best way to invest their money and go elsewhere. This could start a negative chain reaction that could lead to the company’s demise. A major piece of the Amazon business model is market share, and a “sagging stock price makes it harder to attract new talent, invest in …show more content…
The debacle that was Amazon Fire was a huge hit to organizations future in hardware. The failure of the device to handle simple applications eroded many of those who were unfortunate enough to purchase the phones confidence in the Amazon brand. While I get the Amazon strategy with Amazon Kindle, Amazon Fire Phone, and Amazon Fire TV. You sell the hardware, and offer content for those devices in the form of a monthly subscription form. This is a strategy perfected by Apple. However, with the Fire Phone, Amazon entered a market that is highly competitive, and littered with established Smartphone manufactures. The chance of establishing foothold at this juncture was small. Even with this initial failure Jeff Bezo’s is not ready to give up on the Fire Phone. At the Business Insider conference this past December Bezo’s said, that some technologies “take iterations” to get right and that "With the phone I just ask you to stay tuned” (Tam). Throwing more money at a product that had the company taking a 170 million dollar last quarter could certainly hurt investor