Amazon Still in Hyper-Investment Mode: Forte

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July 25 (Bloomberg) -- Telsey Advisory Group's Tom Forte discusses Amazon's surprise second-quarter loss with Emily Chang on Bloomberg Television's "Bloomberg West." (Source: Bloomberg)

The overriding story on profitability is that there -- they're still in hyper investment mode.

The cycle is going to persist for quite some time.

Many investors and amazon are patient and have confidence they will get a return on investment.

I don't think they have to show near-term profitability for the stocks to go higher.

How long is quite some time how patient do investors need to be?

As investors look at amazon and they believe the expansion of the kindle fire hardware lineup, moving into grocery, beyond seattle into los angeles , we are looking at fulfillment centers getting closer to the consumer.

I think they're looking at those as being valuable over the time, the company being able to take significant market share.

When amazon stops investing, that is when the near-term environment does not look worthwhile to invest in.

Is this going to happen in a few quarters, a few years?

I think you could make an argument that if you look at what is ahead of them domestic and international, this could be a multiyear cycle.

They could be spending investing for multiple years for some time.

They said today there top 10 selling products are digital.

We think of amazon as the world's largest e-commerce company.

But are they much more than that?

Is this the new amazon we are seeing?

40% of their unit sales are third-party unit sales and that his physical merchandise.

Amazon is selling a lot more digital products, including the media to consume on the kindle fire devices.

They are still moving a ton of physical merchandise.

Bear on all things e-commerce -- they are an all things e-commerce company.

Does anything stand out to you in particular or is everything pointing in the right direction?

If you look at the numbers, it suggests to me that some of the challenges in western europe that are impacting ebay are also affecting amazon , given that their international growth -- it was affected by foreign exchange rates, but is still looked like he was impacted by what is going on in western europe.

In particular, that flat 40% third-party yield sales thomas that had been increasing -- sales, that had been increasing.

The that was a surprise in the quarter.

We did a story earlier about ebay and same-day delivery.

Amazon does not do that yet.

Should amazon be doing that?

I think amazon doesn't same- day delivery to a small extent.

The headline might be that they are selling groceries.

Part of amazon fresh is giving you the ability to place an order in the morning and get it in the afternoon.

If you look at seattle, they're selling 100,000 spu's. in los angeles, 500,000 skus.

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

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