They made 3.67 in earnings but since they spent 2.90 billion on spending for infrastructure an 445 million in sga expenses, net net they made 1 cent. It's like McDonald's in its growth days of the 1990's. Mcd spent 7 billion over 5 quarters in china and took losses on 3 quarters, if not for accounting rules changes for which are applied to amzn, mcd would have to have taken losses for 7 quarters. New accounting rules applied to amzn allow amzn to write off spending expenses. Actually at this rate of 26% gpm, amzn is making about 17.20 / share
Being a accountant you should know, stock price for some of these shares has nothing to do with GAAP, but everything about the way investors perceive tomorrow. Ive given up trying to figure out the insanity of value. I just look at the money flows. Even that gets dicey.
True, but when they build a fulfillment/data center, there are not-insignificant costs that don't get capitalized but expensed, so you can't say their opex shouldn't increase at all. Besides, they don't just construct a building and get done with it. The center must be stocked with equipement, inventory, powered, cooled/heated, and actually managed and operated by folks on payroll. Since those expense hit before the new infrastructure gets fully utilized, but would stay relatively stable as utilization rate goes up, so the operating margin gets hit at first and then improves over time.
In AMZN's case though, it's not just fulfillment/data centers. They are also greatly increasing spending on content licensing and Kindle engineering/marketing. AMZN's goal seems to be becoming the platform for delivering both hard and soft products over the internet, which would turn it into something of an utility company for e-commerce, and they are essentially putting all the profit they generate toward that goal.