
First, the good news. The good news is that Amazon (NASDAQ:AMZN) has racked up great profits for the past quarter. Apparently, during the holiday quarter of 2014, Amazon has completely blown away projections. It hit a home run. Not surprisingly, the market is quite happy about this development.
Part of the reason why there is an unusual amount of excitement about Amazon’s reported profit and sales figure is the sheer fact that Amazon chose to report a profit. This is also why Amazon continues to frustrate some investors. Usually, companies always aim to generate profits. After all, people venture to start businesses so that they can make more than their costs. Put simply, they want to make a profit. This is pretty straightforward. This is the simplest justification for putting up a business.
Well, one can’t really analyze Amazon in such simplistic terms. As I have mentioned earlier, Amazon is not just an e-commerce player or an online store. Its self-image as well as its view of its place in the future falls more in line with that of a technology company. It views itself, first and foremost, as a technology player.
With this perspective in mind, it makes all the sense in the world for Amazon to spend a lot of money on research and development. This is what frustrates a lot of Amazon analysts, market observers, and shareholders. They’d like to see a profit not just once or twice or every so often; instead, they want Amazon to show profits consistently. This is something that CEO Jeff Bezos hasn’t committed to doing; instead, he is committed to plowing as much money into research and development so Amazon can beef up its technology end.
This clash between Amazon critics and Amazon insiders really all boils down to their competing visions of the company. Is the company just an online retailer that should be making profits year after year? Or is it something bigger? Jeff Bezos is focusing on something bigger. It’s nice that Amazon reported a nice profit this quarter but don’t expect Jeff Bezos to report another profit if he doesn’t want to. His primary concern is to beef up the technology base of this giant Internet company.
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