The following article is based on my own interpretation of the said events. Any material borrowed from published and unpublished sources has been appropriately referenced. I will bear the sole responsibility for anything that is found to have been copied or misappropriated or misrepresented in the following post.
P.Ramakrishna, MBA 2014-16, Vinod Gupta School of Management, IIT Kharagpur
This is with reference with the article published on March 23rd 2015 in Wall street Journal .
Amazon stock’s fell down by almost 22% in 2014 making it one of the average performers among the large capital technology companies .The Stocks in 2015 regained to normal and rose by 20% since the begininning of 2015 regaining its lost share in the market .This is due to the new discloures around AWS (Amazon Web Services).The AWS has given Amazon a strong foothold in the Enterprise Cloud Computing Services .Amazon is setting up a meeting with its East Cost Investors on the future measures that needs to be taken and also the kind and level of investments that needs to be undertaken .
Amazon is planning to reveal its details for Amazon Web Service Businesses but it is unclear what Amazon would be disclosing .If the details are not so good ,then Amazon might have to face the decrease in stocks.Amazon has been using “OTHER” segments business as a proxy for AWS . That segment had revenue of $5.6 billion in 2014 which was up 42% from the previous year. It is the company’s fastest-growing category by far but the retail business still dwarfs it.
Cloud Services is not a easy business and Microsoft ,Google ,InternationalBUsiness Machine are trying to focus on this untapped business.
Though the capital Expenditure of Google($11billion) is low that of Amazon($4.9 billion),investors should not ignore another investment of $4billion is under capital leases .Robert Peck of SunTrust pointed out that ” simple measures of free cash flow don’t always capture outflows associated with capital lease payments, so investors may be missing the underlying capital intensity of Amazon’s business and also estimates an additional $35billion in next five years .”