Speaker 1: We are definitely focused on earnings. Amazon in particular because
Speaker 1: it's a big bell weather on so many different levels.
Speaker 1: Stucks down five percent tim in the after hour, the
Speaker 1: company sales forecast falling short of estimates, leading to a
Speaker 1: share drop. The guidance assumes one billion dollars of costs
Speaker 1: those related to COVID nineteen. We know the company if
Speaker 1: we were to think about what it's been doing over
Speaker 1: the last sixteen months, just massive investments in trying to
Speaker 1: stay ahead of demand or keep up with demand, especially
Speaker 1: the early part of COVID nineteen. Earnings per share though
Speaker 1: for the second quarter Carol handily beating estimates, coming in
Speaker 1: at fifteen dollars and twelve cents of share, beating estimates
Speaker 1: of twelve dollars and eight cents. And I just wonder
Speaker 1: if it's a readjustment as the economy reopens. Maybe you know,
Speaker 1: streaming and retailers are online retail just asn't happening. Let's
Speaker 1: get to our Bradstone. He is Senior Executive editor of
Speaker 1: Global Technology at Bloomberg News. He's in our San Francisco bureau.
Speaker 1: He is our go to. He's authored The Everything Store.
Speaker 1: He's got an update on that book. It's newest book
Speaker 1: is Amazon on Bound Jeff Bezos and the Invention of
Speaker 1: a Global Empire. It's a great book. Relove brad Stone,
Speaker 1: M brad Stone down five percent? Is this? I'm how
Speaker 1: do you read this? Hi? Guys? First of all, thank you. Well.
Speaker 1: I mean, look, I've been covering Amazon for a long time.
Speaker 1: You know, they're they're always these these unexpected fluctuations, sometimes
Speaker 1: below expectations, sometimes above. You know, I read this is
Speaker 1: probably maybe a bit of an indicator that at least
Speaker 1: that at one point the pandemic for Amazon was ebbing
Speaker 1: and customers had more choices, right, and they were going
Speaker 1: back into stores. Um, I think the company increasingly thinks
Speaker 1: they'll be shopping elsewhere, have other options, and so that's
Speaker 1: why the guidance for the third quarters a little bit weak. Um,
Speaker 1: you know, AWS basically hit its targets, so you know,
Speaker 1: the most profitable and powerful part of Amazon's business is
Speaker 1: forging ahead. But yeah, they're a little light here on
Speaker 1: net sales. Um, they've got that massive distribution center that's
Speaker 1: basically been a cost during the pandemic, and they're building
Speaker 1: more from filment centers and distribution hubs. So you know,
Speaker 1: they missed a little bit, and there's a little bit
Speaker 1: of a course correction. But the one thing that I've
Speaker 1: learned covering Amazon is that today's course correction. You know,
Speaker 1: these things happen in the moment and then by the
Speaker 1: end of the week, everybody forgets about them, because, look,
Speaker 1: this company is growing much faster than retail overall. It's
Speaker 1: still selling hundreds of billions of stuff, Brad, I mean
Speaker 1: the numbers. I always feel like there's a couple of
Speaker 1: companies like an Apple or Amazon, that their numbers are
Speaker 1: just off the charts. Yeah, I mean twenty seven percent
Speaker 1: growth for you know, a company that is valued at
Speaker 1: one point seven or maybe one point eight trillion dollars.
Speaker 1: It's still extraordinary. And look, I the earning stress came out.
Speaker 1: I haven't completely digested them. But that other category where
Speaker 1: the AD revenue is tucked is you know, they've they've
Speaker 1: now twenty five years into the company's existence, are minting
Speaker 1: yet another powerful revenue stream. So it'll be interesting to see, uh,
Speaker 1: you know, so many things, including how that develops, what
Speaker 1: the FTC does with the proposed MGM merger um, and
Speaker 1: then how Andy Jesse's leadership style diverges from Jeff Bezos. Well,
Speaker 1: let's talk about that a little bit, because this is
Speaker 1: we don't know if he's going to be joining the
Speaker 1: earnings call. Is Our Life blog points out Jeff Bezos
Speaker 1: hadn't joined an earnings call since two thousand nine, so
Speaker 1: it's not typical that the CEO for Amazon joints the
Speaker 1: company's earnings call. Um, what is the task that he
Speaker 1: has out ahead of him now to to continue with
Speaker 1: what Jeff Bezos did for for more than twenty five
Speaker 1: years at Amazon. Yeah, I would put it into three buckets. Um.
Speaker 1: One is continuing uh to invent, to to nurture a
Speaker 1: culture of inventiveness. You know, in my two books, and
Speaker 1: particularly An Amazon and Bound as I as I went
Speaker 1: and kind of did the archaeology on projects like Alexa
Speaker 1: or the Amazon Ghost Store, it always starts with Bezos
Speaker 1: and an idea from Bezos, Bezos pushing a team, and
Speaker 1: you know Jeff isn't going away, but he's going to
Speaker 1: be arguably less involved. So how does Jess continue to
Speaker 1: make Amazon an inventive company without the founder and you know,
Speaker 1: chief nerd in the halls the whole time. The second
Speaker 1: thing is corporate culture right. It's like, you know, we
Speaker 1: can argue whether Amazon needs to fix it, but certainly
Speaker 1: it needs to evolve it. You know, they have more
Speaker 1: than a million employees, lots of work work, warehouse workers
Speaker 1: feel trodden upon, You've got unionization efforts at the door.
Speaker 1: So he's got to he's got to create a new
Speaker 1: contract with employees. And then the third thing really quickly
Speaker 1: is is just the antitrust scrutiny. Right, then Jesse will
Speaker 1: present a kind of humbler target, I think than Jeff Bezos,
Speaker 1: the richest guy in the world, but contending with basically
Speaker 1: attacks on all fronts from State A, G S to
Speaker 1: the FDC and d o J to the European Union,
Speaker 1: and a kind of growing bipartisan sense of the big
Speaker 1: tech companies have too much power and it needs to
Speaker 1: be curtailed. Bred Amazon Web Amazon Web Services AWS is
Speaker 1: just a massive business and for years it's allowed Amazon
Speaker 1: to invest in in other things, those things like Alexa. Um,
Speaker 1: what is the next driver of profit at Amazon? Is
Speaker 1: there another AWS that they're working on? Is Alexa that
Speaker 1: you write about so much in your in your most
Speaker 1: recent book, is that starting to show results at least
Speaker 1: on the top line. Yeah, is alexis starting to show results?
Speaker 1: I mean, I think the answer to that is we
Speaker 1: kind of don't know. Um, you know, they opaque right
Speaker 1: to the financial statements are opaque. Um Amazon alexis so
Speaker 1: tied in with other parts of the business. Um. Uh,
Speaker 1: probably not, I would say, I mean, maybe it's close
Speaker 1: to break even. But but you know, one thing that
Speaker 1: you mentioned is like AWS, it is quite profitable, but
Speaker 1: by and large goes to build more AWS. Right They're
Speaker 1: building data centers around the world, and you know, trying
Speaker 1: to expand into new services, making big investments in AI.
Speaker 1: I think that the powerful kind of profit machine here
Speaker 1: is advertising, and those dollars are being used to buy UH,
Speaker 1: to license more TV shows and movies, to create more
Speaker 1: to buy MGM. And then there's lots of other things
Speaker 1: that we frankly don't know about. I mean, we do
Speaker 1: know that they've got a satellite initiative called Project Hyper
Speaker 1: that will compete with Starlink, by bunch of things in healthcare,
Speaker 1: probably a bunch of things in the device business, like
Speaker 1: a home robot. They've been working hunt for a couple
Speaker 1: of years, but we don't quite know what the big
Speaker 1: next hit will be yet. How do you think what
Speaker 1: will be the role I guess is what I want
Speaker 1: to get to is of Jeff Bezos in this company.
Speaker 1: Obviously it's his baby. And even though he's stepped back
Speaker 1: and there's a new officially a new CEO, does he
Speaker 1: still kind of poke around, um Brad? Does he still
Speaker 1: kind of get involved in things? And will that be
Speaker 1: problematic to Jesse or is that necessary to kind of
Speaker 1: keep Amazon being innovative in some ways? So, Carol, my
Speaker 1: perspective on this has changed a little bit. I was
Speaker 1: in the wonderful town of Van Horne, Texas last week
Speaker 1: to see uh Bezos blast off in the sky to um,
Speaker 1: let's just say, imaginatively shaped rockets, and one of the
Speaker 1: things he said, yeah, one of the things, we don't
Speaker 1: need freud here. I'm just gonna say anyway, Family Radio.
Speaker 1: One of the things he said in that press conference
Speaker 1: is that he was going to spend the majority of
Speaker 1: his time on Blue Origin of Space Company and on
Speaker 1: the Bezos Earth Foundation excuse me. And it really made
Speaker 1: me think that he is giving Jasse the running room
Speaker 1: to go operate on his own, and then maybe he's
Speaker 1: going to minimize his time. He's a board member. He's
Speaker 1: the chairman of the board, but I don't expect him
Speaker 1: to really be patrolling the hallways of Amazon anymore. So
Speaker 1: I think, you know that's going to be probably in
Speaker 1: some ways a blessing for Jazz gets to put his
Speaker 1: own stamp at the company, but you know, also a
Speaker 1: little bit of a curse, because obviously a lot of
Speaker 1: the success of Amazon over the past twenty five years
Speaker 1: derives from Bezos's relentlessness and the halo of the founder
Speaker 1: that he has at the company and how he manages
Speaker 1: to push her forward. Because I do wonder is it
Speaker 1: more like an Apple that lost some of it's a
Speaker 1: lot of it's mojo when Steve Jobs left, although it's
Speaker 1: gotten it back under Tim cook in a big ways.
Speaker 1: It didn't lose its mojo, right, but it went through
Speaker 1: a period when he was gone that it was tough,
Speaker 1: or you know, even Microsoft and adjustment after Bill Gates,
Speaker 1: although it has definitely gotten its mojo back. I mean,
Speaker 1: I guess, how do we investors think about this company
Speaker 1: longer term? Yeah? Yeah, you've defined the sort of bomber
Speaker 1: to Tim Cooks spectrum right where or the bomber de
Speaker 1: Satia spectrum? Where will Andy Jassy Land and we don't know, right,
Speaker 1: it's so early. Um, you know this, this this quarter
Speaker 1: isn't a great start at least with investors. But I'm
Speaker 1: sure Amazon is looking at it long term. And Jasse
Speaker 1: is a creature of Amazon. He's been there for more
Speaker 1: than twenty years. And as you say, Bezos isn't going away,
Speaker 1: um and and and says he will continue to work
Speaker 1: on new things. So I don't know. I mean, I
Speaker 1: don't think investors um have any cause for concern. I
Speaker 1: think the big macro things are looking at or things
Speaker 1: like regulatory and and um, you know, whether Amazon can
Speaker 1: continue to hire and retain the best talent. Let's talk
Speaker 1: about that regulatory risk a little bit. What do you
Speaker 1: think is the biggest regulatory risk to to Amazon? Is
Speaker 1: it that regulators come in and say, you've got to
Speaker 1: spin off a wus as its own company. You've got
Speaker 1: to spin off his appos as its own company. Is
Speaker 1: that what that looks like? Now, I'm pessimistic about that.
Speaker 1: You know, breaking up a company is a long, arduous
Speaker 1: process that ultimately happens in the courts. We have a
Speaker 1: conservative judiciary in the in the US that's already sent
Speaker 1: uh an FTC case against Facebook back to the agency.
Speaker 1: I think Amazon, actually, you know, despite maybe the political
Speaker 1: coalition gathered against it, holds a lot of cards. And
Speaker 1: you know, if if if maybe by by legislation, uh
Speaker 1: the U. S. Congress, you know, demands that like Internet
Speaker 1: platforms can no longer um be both a seller and
Speaker 1: a market participant, you know, had the platform and be sellers.
Speaker 1: You know, Amazon is just gonna adjust. They're gonna do
Speaker 1: things like, um, you know, demand that their sellers, uh,
Speaker 1: instead of being independent third party merchants, sell them the
Speaker 1: merch nights and then operate like a more conventional retailer.
Speaker 1: So I actually think there are ways that the company
Speaker 1: can adjust. I think on the margins. Maybe that some
Speaker 1: of the things that they do, the more controversial things
Speaker 1: like demanding sellers give Amazon the lowest price, or harvesting
Speaker 1: the third party data from sellers to decide what to
Speaker 1: put in private label. I think we might see Amazon
Speaker 1: walking away from some of those things, But I don't
Speaker 1: know that that necessarily hurts the company's financial prospect in
Speaker 1: the long run. Hey, Bread, is there anybody that Amazon
Speaker 1: looks over the shoulder at. I mean, it's hard to
Speaker 1: even imagine, But is there anyone globally that they keep
Speaker 1: an eye on as someone who could start to really
Speaker 1: significantly eat into them more largely as a business. And
Speaker 1: I know they're They've got multiple businesses, but I'm just
Speaker 1: wondering who I always think about when I think about
Speaker 1: a company, who are they looking at you over their
Speaker 1: shoulder at right? And I think it's it's different companies
Speaker 1: in different pockets of their business. This company now does
Speaker 1: so much, but in an entertainment it's now Netflix and
Speaker 1: Disney and Discovery with the recent deal, um and and Apple,
Speaker 1: And in retail increasingly Shopify with just catering to brands
Speaker 1: UH and in aws it's Microsoft and Google. So you know,
Speaker 1: in a way, and this is probably one of its
Speaker 1: strong arguments. Sure, I gotta jump in President by getting
Speaker 1: ready to make some comments. Bradstone, though, thank you so
Speaker 1: much time and we so appreciated a Bloomberg News