Amazon Under Fire: Is Jeff Bezos Overextended?

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July 24 (Bloomberg) -- Bloomberg Contributing Editor Paul Kedrosky previews Amazon’s earnings on “Bloomberg West.” (Source: Bloomberg)

Important, here we are having amazon reporting after the bell, and they have not turned a profit yet and we do not have information on how particular products and services are doing.

Paul, does that matter?

It has not mattered, so why should it now?

That's the obvious answer, but i think there is a sea change coming to amazon.

It will start to matter because there is a sense that the company is in a position, given its scale and size, that it should be producing more profits.

In particular, initiative to drive that, like the phone.

They are getting poor reception.

Kindle unlimited has gotten a waffling reception.

I think you will see much tougher questioning of amazon, in particular, about its new products, and how they would do anything to change what has been a pretty lousy picture in terms of cash flow generation.

And yet they completely dominate e-commerce.

What about the set top box, the smartphone, the one for shopping?

All of these side projects, we do not know about.

Amazon drives lots of revenues and rose at a big clip, but at a slower clip.

Sales growth has come down from 40% year-over-year to 27% year-over-year.

The recent quarter was 22% on a year-over-year basis.

You add to that the margins collapsing.

We know that they are pathetic at amazon.

Stock investors decided they do not care about that.

Fundamentally, i think the biggest transformation that we do not talk about a lot -- this has gone from a media company selling cds to books.

Five years ago, that was 50% of revenue.

In the last year, 25% of revenue, so expanding the categories that they sell into has grown revenues but has pushed margins even lower for the company to the point where you wonder where can they grow, and do these projects matter whatsoever?

If investors are so excited about facebook turning a profit, why don't their care that amazon does not turn a profit?

Because it has not mattered.

Investors are wonderfully backward looking and extrapolating forward.

You have been hit over the head with a mallet on amazon if you are focused on cash flow.

It has been you up since the ipo.

People talk about their problems with cash flow.

It has never paid to focus on their cash flow.

People said i get it.

As i said earlier, there is a sea change.

People are saying there is a broad new spectrum of issues, a lot more places to allocate your capital.

There are open questions with its ability to generate cash.

Why do i own it?

We will be all over their earnings after the bell today.

Thank you so much.

This text has been automatically generated. It may not be 100% accurate.


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