Amazon’s Earnings Conference Failed To Reassure Investors, Shares Lost 5% On Friday
Few analysts and investors are questioning if Amazon’s (NASDAQ: AMZN) long-term growth story is in trouble. On the contrary, the question has now shifted to the company’s near-term outlook after the company reported its third quarter earnings results which fell short of expectations.
Amazon’s management also detailed to investors many of its near-term spending plans which investors are questioning, as evidenced by the stock’s five percent decline on Friday.
Following the company’s earnings report, management hosted a conference call to discuss its third quarter and outlook looking forward.
Here is a selection of notable quotes, courtesy of Seeking Alpha’s transcript of the call.
Brian Olsavsky (CFO) on why the international’s margins were low: “we are seeing expansion to support selection, expansion at fulfillment network increases. We’re also investing in digital content and additional Prime benefits, fresh location Prime Now. But by far the biggest individual thing is the investment in India that we continue to make and very excited about it.”
Olsavsky on Prime Now And Groceries: “It’s a slightly different model obviously where we’re more about immediacy and a smaller list of items available in one to two hours. But there’s certainly a lot of people who are using that for groceries and consumable items. And that is now up to 40 cities across seven countries versus 17 this time last year. We’re also adding restaurant, Amazon Restaurant Delivery to the Prime Now offer in 19 metropolitan cities in the U.S. and that’s up from two last year.”
Olsavsky on AWS Pricing: “The thing I can tell you about pricing is that our pricing is, price reductions are a core part of our philosophy, of course. We had a price decrease in Q3, and that was our 52nd since we started this business. So we are comfortable with price decreases. Not only did we lower the prices of our products but we also create new services that are cheaper that customers can switch to. So they can also benefit from that as well.”
Olsavsky on long-term operating margins: “As far as long-term operating margins, I can’t forecast that right now. I can’t forecast that for our AWS business either. We are again working on two fronts. We are honing the businesses that we’re in and making them as efficient, as profitable as possible while also investing very pointedly and very wisely, we believe, in things that will enhance customer experience and create lasting businesses for us down the line. We’ve said we want things that customers will love, can grow to be large, will have strong financial returns and durable and can last for decades. So that’s still our mission. We have pillars of the business right now with Marketplace, AWS and Prime and we’re actively looking for a fourth and fifth pillar.”