Amazon’s world domination plan: No profits?

Molly Wood Oct 24, 2013
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Amazon’s world domination plan: No profits?

Molly Wood Oct 24, 2013
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Today investors find out if this is the quarter Amazon made money for its shareholders. Chances are, it probably isn’t.

Amazon gets lots of attention on Wall Street even though profits aren’t the online retailer’s top priority. Founder Jeff Bezos takes the long view, as he frequently tells interviewers.

“You really can’t do the right thing for customers if you’re short-term oriented,” he told Charlie Rose in 2010.

That’s meant plowing profits back into the business, betting on ideas that may lose money for years.

Just this month, the company began selling wine in a few states and even commissioned pilot episodes for its video streaming service. This is from a company that started out selling books — the paper kind.

The hope from investors is that Amazon will eventually flip a switch and focus just on what’s really making money. But it may not be that easy.

“If I may use an analogy, you’ve built a racing car engine and you’re out there using it in a car race,” says analyst Horace Dediu of Asymco. “You can’t turn that engine into a tractor engine overnight.”

Starting new businesses may really be what Amazon is good at, Dediu says, not fine-tuning them.

But even this skeptical analyst admits, it’s hard to argue with the market, which still loves Amazon.

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