Making Sense of Amazon's Big Spending Blitz

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April 24 (Bloomberg) -- Shahid Khan, co-founder and chairman of Mediamorph, Itzhak Ben-David, a finance professor at Ohio State University, and Bloomberg's Jon Erlichman discuss Amazon's earnings and strategy with Pimm Fox on Bloomberg Television's "Taking Stock." (Source: Bloomberg)

Jon erlichman, what went on in terms of the details of amazon's business?

We know that they have been willing to sacrifice short-term profit for the growth of the business and have so much dominance in the world that is the amazon supermarket today.

No change today.

The company that generated $19 billion in revenue and suggests in the coming quarter, they will take a loss because they are spending so much.

On all different fronts.

They are battling netflix and content deals in hollywood.

And expanding their offerings and grocery.

For a set price for people that use their prime service, you can a boxful of dry goods and get those coming.

They know they are the shopping choice for many these days.

They want to be that choice hands-down.

You have worked with some of the biggest television companies in the world.

I know you're an expert in terms of how companies can leverage all of these new technologies to make even more money.

Talk about the platforms that amazon has.

What about cloud services?

I hear this is a big moneymaker for amazon but it flies under the radar?

Is not just a big moneymaker, it's a high margin of business for them.

If you take a step back and try to define what business amazon is in, it's not just a retailer or a device company.

It's not just a company that provides entertainment.

Amazon is in the business of captioning shares of the consumers.

Everything it does allows it to go get more and more money from your wallet whether it is gross fees, pantry service, amazon fresh.

The new fire tv or kindle devices -- everything is trying to capture a larger share of the wallet.

A lot of the pieces would go to taxes.

But not necessarily when it goes to amazon.com.

David, you have looked at taxes and amazon's business.

What have you found echo?

A state that transitions to forcing everyone to collect taxes forces a decline in amazon sales.

They all show the decline of about 10%. jon erlichman, does it seem as though amazon has not been playing fair?

We know you have to have a physical location to collect sales tax but governments are not happy about this.

Some have said that you are paying the sales tax.

That is true and amazon has been doing their part to battle on certain fronts and try to get the best service they can with workarounds.

Even if it means shipping stuff from out-of-state.

This company is driven.

They are at a point where they have such scale for their various warehouses that allow you to get you stuff really fast and they like that.

They sure -- serve the customer well.

They keep spending so that they don't have to worry as much about those battles in washington.

Sales up more than 20% for the quarter?

A $20 billion a quarter run rate for amazon right now.

Come in this idea of what they are trying to do.

They really want to really level the playing field by running over everybody.

I mentioned that they are looking for world domination.

This issue about taxes, take the time value of money.

The amount of money it saves you by not going to a grocery store, looking for parking and the avenues you can go to and click.

45 pounds worth of items.

It saves you a lot of time and money.

Amazon has not been able to be profitable doing that.

It is not measured on profitability, it is measured on revenue growth.

At some point in time, they will have to be measured differently.

But that is not the case right now.

Do you know when that would be?

Do the investors have patients?

If you are invested in domination, you invest a lot more.

The next thing is going to be the amazon phone.

It will require a lot of investment.

They are really changing the game on how they are viewing the government.

And ideas to compete with apple.

Amazon is a smart company.

They will come up with a unique device.

And with the fire device, they control your living room.

A definition of mobile phones of changed.

They are remote controls for your life.

Could that be the kind of thing where you talk about the wallet in echo?

It takes a chunk out of communications that you have on a monthly basis and curving revenue.

David, you mentioned taxes.

Does amazon enjoy an unfair advantage measured against local businesses?

Not only local businesses but other online retailers.

Walmart.com and target.com, they collect sales taxes.

They are at a competitive disadvantage against amazon.

Is there any monopoly law ama zon runs afoul of?

We need to ask the lawmakers.

This is a decline in sales.

We see a larger decline of $300 or more.

It seems that this is a big competitive advantage for amazon against brick-and-mortar retailers and online retailers.

I want to thank you gentlemen

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

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