Anybody looking at Amazon's finances seriously just needs to see this to understand what Bezos is doing:
http://ycharts.com/companies/AMZN/free_cash_flow
Quote:
Free cash flow is the amount of cash generated by a business that is available for distribution among its security holders. Security holders include debt holders, equity holders, preferred stock holders, and convertible security holders. Specifically, free cash flow is used to pay dividends, make acquisitions, develop new products, invest in new property, plant and equipment, pay interest expenses, and reduce debt.
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Note the pattern: they generate big flows and then spend them, actively trying to end the fiscal year at zero or lower.
From the horse's mouth:
http://www.bloomberg.com/news/2013-0...investors.html
Quote:
Amazon is spending to improve a network of warehouses and enhance cloud-computing facilities that give customers a cheap and safe way to outsource data centers. Operating margin is estimated to be 1.8 percent this year, down from 4.6 percent in 2009, after a building boom to lure cloud customers and boost online product sales. Bezos said those investments ultimately will add to free cash flow that totaled $2.09 billion in 2011.
This year, cash flow per share from operating activities for Seattle-based Amazon is expected to rise 65 percent to $10.68, from an estimated $6.48 in 2012, according to data compiled by Bloomberg. Operating cash flow is what a company spends on regular business operations, which can include depreciation, amortization and changes in working capital. Free cash flow excludes capital expenditures.
Meeting customers’ demands, even if that means lowering prices to build loyalty, will boost free cash flow over the long term, Bezos said.
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Look behind the curtain of capital spending and Amazon generated $2B in free cash in 2011 and is on track to double it by 2015. Stop investing, and that would result in $4B taxable profits.