Amazon Turns a Financial Report Into a Marketing Event

Jeff Bezos

Photographer: Mike Kane

Big technology companies had a wonderful romp in after-hours trading. Following Thursday’s third-quarter earnings, most of the big names were up. Microsoft Corp. jumped as much as 4.6 percent; Alphabet Inc. was up around 3 percent. And Twitter Inc., a decidedly smaller name, reported before the market opened and ended the day with a 19 percent gain.

But Amazon.com Inc.’s success was the most fun to watch. The Everything Store got a 7.7 percent bounce in late trading after it revealed net income of $256 million. That’s nothing! But for Amazon, it’s an unexpected, humongous pile of cash. Teach investors to expect losses, and they’ll freak out when you turn a small profit. Revenue growth, of course, is what’s driving Amazon’s soaring stock price. Net revenue reached $43.7 billion, up 34 percent from a year ago.

One investor privately referred to Amazon as “the Cheetelephant.” If Amazon were an animal, this person reasoned, it would be an elephant that could run as fast as a cheetah. That’s a fawning review, I know, but I’ll stomach a little adulation in exchange for a great image.

I’m struck by how expertly Amazon turns news events into tremendous marketing moments. The Whole Foods acquisition trumpeted Amazon’s low prices and Whole Foods’s great quality, assuring customers that they would soon get the best of both. Next, Amazon won stories in basically every local newspaper in the U.S. about which city the company might chose for its second headquarters. The Onion even got in the mix: “Jeff Bezos’ Heart Breaks A Little Reading Albany’s Amazon Headquarters Pitch.”

Just a few breaths after plunging head first into the grocery business, Amazon is scaring the crap out of another industry. This time it’s pharmaceuticals. The company has reportedly received licenses in a dozen states to sell medical devices and equipment.

Now it’s earnings, and all Amazon wants to talk about is Alexa (its voice assistant), Echo (its speaker), Whole Foods (its new grocery store chain), Fire TV (its less-successful take on the Roku) and Amazon Music (a service I’d never heard of before I read Amazon’s third quarter financials).

None of those things really explain why Amazon is worth $467 billion. Amazon’s business is three-fold: e-commerce, enterprise computing and, slowly but surely, advertising. That’s what’s driving this Cheetelephant.

Lost in the marketing materials is that profits from its e-commerce business were really small in North America and nonexistent in the rest of the world. All in all, it was a money-losing business, albeit a gigantically large one.

Amazon Web Services drove profits. It generated $1.17 billion in operating income on $4.58 billion in revenue. Increased competition is a threat to those margins, however. Microsoft’s Azure, the No. 2 player in the market, is showing stellar growth. Revenue from that business increased 90 percent from last year. Alphabet remains cagey about how well Google Cloud is doing but is talking it up quite a bit.

Jeff Bezos came out well Thursday. His fortune grew by as much as $6.6 billion. That means that Bezos could wake up tomorrow with an auspicious title: The richest person in the world.

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And here’s what you need to know in global technology news

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