Jeff Bezos is one of the world’s wealthiest people. But he was born poor. He wanted to start a business right after college, but didn’t. So how did he start?
Source: Funders and Founders
Jeff Bezos is one of the world’s wealthiest people. But he was born poor. He wanted to start a business right after college, but didn’t. So how did he start?
Source: Funders and Founders
After a breakout 2015, is Amazon(AMZN) losing its luster? While its stock price is likely to tick higher, narrowing margins could weigh on investors, analysts told CNBC’s “Squawk on the Street” on Monday.
At $593.19, shares of the tech-driven retailer are 12 percent lower so far this year after a January earnings reportsent the stock tumbling. Now the company’s dominance in cloud computing is facing more competition as industry laggard Google (GOOGL) poaches customers.
Raymond James internet analyst Aaron Kessler downgraded the stock last month, calling for a price target of $655, down from more than $700.
“We’re still positive, but I would say we see the pace of margin expansion to slow,” Kessler said Monday.
While Amazon’s disruption of the retail and cloud space has been “phenomenal,” there are concerns, said Bob Peck, internet equity analyst at SunTrust Robinson Humphrey, who has a price target of $600 on the stock.
“[Amazon CEO] Jeff Bezos has recently given you several quarters of margin expansion, letting it flow to the bottom line,” Peck said. “Investors love to see that. If you look back historically, he then tends to reinvest … you’ll see margins under pressure as we go forward here.”
Peck values Amazon’s cloud business, Amazon Web Services, at $100 billion and said his research shows that the business is positioned well in spite of competition. Still, Google and Facebook (FB) are Peck’s top stock picks in the internet sector, while Kessler recently upgraded Twitter (TWTR).
Amazon did not immediately respond to CNBC’s request for comment.
“[Amazon is] going to see a little more competition on the AWS side, so I think just the perception of more competition could be a concern,” Kessler said.
Written by Anita Balakrishnan of CNBC
Last week’s positive performance across global markets gave investors a chance to catch their breath and retest the waters. U.S. stocks were up with the S&P 500 notching a 2.85 percent gain and the Dow Jones Industrial Average up 2.61 percent. The tech-heavy NASDAQ Composite Index was up just over 3.87 percent. European stocks were also up, posting a positive 1.87 percent as measured by the Stoxx Euro 600 Index. Japanese equities gained 6.8 percent after the Nikkei 225 Index rebounded from heavy selling the week before.
U.S. equities posted their first three-day rally of the year and the biggest three-day gain last week since August 2015. While all sectors were up, the energy and financial sectors are still down year-to-date as oil and stubbornly low interest rates continue to weigh on those areas of the market. In fact, the energy and financial sectors are down 6.21 percent and 10.65 percent for 2016, respectively. As the chart below highlights, only the utilities and consumer staples sectors are holding onto positive territory with consumer staples only just so. Will 2016 be another year where a small group of stocks or sectors drive the market’s performance? No one knows for sure but we continue to believe that active management, with a focus on being selective while leveraging secular trends, is still the most prudent way to manage an equity portfolio.
Federal Reserve Minutes
The Federal Reserve released the minutes from its most recent meeting last Wednesday allowing investors a glimpse into how one of the world’s most powerful central banks views the economy and global markets. While investors already knew the outcome of the meeting, being able to see details on how the Federal Reserve came to the decision not to raise rates is what markets were focused on last week. More specifically, the Federal Reserve minutes showed officials were struggling to agree on their outlook for inflation and how risks to the economy may materialize. What appeared to drive markets upward was the fact the Federal Reserve gave few clues as to when they will raise rates again indicating rates will likely remain lower for longer. The next meeting for the Fed is March 15-16 and, given their comments from the January meeting, an interest rate increase at that meeting seems more unlikely than ever. As we said in our 2016 outlook, we continue to believe the Federal Reserve’s initial target of 1.25-1.50 percent by year-end would be difficult to achieve.
Oil prices were whipsawed this past week as news of a potential production cut pushed prices higher while larger inventory stockpiles weighed on the commodity. Russia, Saudi Arabia, Qatar, and Venezuela met earlier last week and indicated they will cap their output if Iran and Iraq did so as well. While both Iran and Iraq have not confirmed whether they will participate, it is newsworthy that Russia has joined the chorus of those countries seeking to limit production. Russia had previously refused to consider such action. It’s no wonder oil-rich countries are beginning to take these measures. While energy companies must delay investment and lay off workers, countries that largely depend on oil revenue are reeling from the low prices. In fact, Saudi Arabia had a record deficit of almost $98 billion in 2015 and Standard & Poor’s just reduced the country’s credit rating from A+ to A-, citing the long-lasting impact of low oil prices on the economy. In all likelihood, oil volatility will remain elevated as investors await the impact of the agreement on future inventory levels as well as any changes in global demand.
Fun Story of the Week
It’s easy to think we know almost everything about our planet. Other than the deepest oceans, humans have explored nearly every square mile of every continent and, with the use of satellite photography, this becomes all the easier. Despite this, we still discover amazing natural wonders not previously known to science. In many cases, these are the subject of rumor or shrouded in mystery and distorted over the years as they are passed down through generations. Some of these tall tales turn out to be just that, nothing but fiction used to tell a story. However, there are some that turn out to be true. Up until recently, there was a rumor of a river deep in the Peruvian rainforest that is so hot it can literally boil. Adding to the mystery were cryptic references to the river in old petroleum survey reports dating back to the 1930s. It wasn’t until geoscientists decided to pursue those legends and journey deep into the rainforest to see it with their own eyes. What they discovered was the Mayantuyacu, a natural, 4-mile geothermal stretch of a river that is indeed over 200 degrees Fahrenheit. This is exceptionally amazing in that it would require incredible amounts of heat to boil the river’s flowing water. While there are documented hot springs throughout the Amazon, none are nearly as big as the Mayantuyacu or as far away from the nearest volcano. In fact, the river lays hundreds of miles away from the closest active South American volcano, making it truly a natural wonder.
Amazon has raised its free-shipping threshold for orders from non-Prime customers to $49 from $35 in the United States.
Orders of books worth $25 or more will, however, be eligible for free shipping,according to the shopping website.
Amazon has been spending on rolling out several new services for members of its $99-a-year Prime loyalty program, including one-hour delivery and original TV programming, to attract customers in a highly competitive online shopping market.
The company’s shipping costs rose more than 18 percent to $11.5 billion last year.
The online retailer is also quietly inviting drivers for its new “on-demand” delivery service to handle its standard packages as it looks to speed up delivery times and reduce costs.
Written by Kshitiz Goliya of Reuters
The biggest players at the Sundance Film Festival are Hollywood outsiders. Amazon and Netflix, with their deep pockets and big ambitions, have picked up several films and have driven up the bidding for others. Backed by the might of their massive audiences, superior technology, and business models unfettered by the typical constraints of Hollywood, these tech giants provide a new hope for independent filmmakers.
Amazon’s bought five independent films so far, including the well-receivedManchester by the Sea for a reported $10 million. Netflix, meanwhile, has picked up streaming rights for three films, including Tallulah starring Ellen Page, and announced it will produce a slate of indie features. And the film festival isn’t over until the end of this week.
This isn’t the first year Netflix and Amazon have attended Sundance. But their presence looms larger than ever over the festival and the film industry. As major studios have been slower to pick up films, the two tech titans have aggressively offered top dollar, rattling the nerves of those at established studios.
And yet for filmmakers, their interest offers a new kind of opportunity. At the most basic level, the big budgets offer filmmakers a chance to repay investors. More importantly, Netflix and Amazon provide access to a much wider potential audience while promoting a diverse range of stories and ginning up excitement for independent films in general. But as Netflix and Amazon try to change the industry, they must reckon with what filmmakers ultimately want.
And what’s good for artists isn’t always what’s good for Amazon and Netflix.
A New Arthouse Circuit
Independent filmmakers have always struggled to find funding and an audience. But in the past 10 years, the number of indie filmmakers has grown substantially as the cost of making films has dwindled, making competition for distribution even more cutthroat. “It’s becoming more and more difficult to get independent films distributed whether that’s in traditional movie theaters or even on cable, ”says Tom Nunan, a founder and partner of Bull’s Eye Entertainment and a lecturer at UCLA’s school of theater, film, and television.
In recent years, however, Netflix and Amazon have come onto the scene with platforms that command tens of millions of viewers—and perhaps just as importantly, seemingly unlimited bandwidth. After all, streaming video isn’t limited by the number of available movie screens or TV time slots.
As both tech companies amassed their inventories of self-produced content, they also started acquiring independent films, ranging from the big Sundance acquisitions this year to smaller buys that end up on their services through distributors. “The idea that the streaming services can be our new arthouse circuit is just nothing short of lifesaving for these artistic storytellers,” Nunan says.
“The best thing is that because of Netflix and Amazon and all of these places, everyone can see these movies all over the world,” says Rob Burnett, the writer and director of The Fundamentals of Caring, to which Netflix acquired the streaming rights ahead of Sundance. “All of these movies that may not get theatrical releases, or may get minimal theatrical releases, they can now be seen.”
Netflix and Amazon not only offer built-in audiences, but those audiences can experiment more easily. While most moviegoers may not want to “risk” an entire evening stuck in a theater watching, say, an independent documentary about concrete changing color, Nunan says, tuning in at home on Netflix or Amazon demands virtually no investment. The film is already paid for, and can be turned off at any time.
Amazon says it has seen “good demand” for independent films. “If you don’t live right in a city, it may not be convenient to see some of these very interesting independent films,” says Roy Price, head of Amazon Studios. “But once you take that constraint out of the system, we’ve observed there are categories that tend to thrive when they have greater availability. It’s been a good few years for independent films and documentaries.”
The tech giants also have more leeway to experiment. Their subscription-based models mean they don’t need every film to be a blockbuster. A single movie or show on Netflix and Amazon needn’t appeal to everyone; the key for both platforms is making sure they offer enough of everything to attract anyone.
Renowned filmmaker Spike Lee, for example, was able to get his film Chi-Raqmade by Amazon after being turned down by the major studios. “It’s a great option for filmmakers because now you have another place to go to. I knew going in that it would be a very long shot for a major studio to do Chi-Raq. Thank god Amazon [did],” Lee says. “The more options there are, the more options there are for anybody, including young filmmakers.”
Written by Julia Greenberg of Wired
Amazon.com Inc.’s biggest quarterly profit and Wall Street’s swift punishment for missing expectations overshadowed a trend that is worth keeping an eye on.
Shipping expenses rose again in the fourth quarter, and by a wider margin than m any analysts expected. Overall shipping costs during the holiday quarter jumped 37% to $4.17 billion, while the cost as a percentage of sales rose to 12.5% from 10.9% a year earlier.
Though such expenses are expected to creep up as Amazon pushes more merchandise out the door, at least one analyst seemed troubled enough by the trend to ask executives about it.
“Any color on the higher shipping costs? And is that percentage of net revenue a new normal?” Cowen & Co. analyst John Blackledge asked Amazon CFO Brian Olsavsky on the company’s call to discuss earnings.
Mr. Olsavsky said the higher costs resulted from more inventory coming in from third-party sellers who pay to use Amazon’s warehouses and logistics for their merchandise . That influx could have caused Amazon to turn to pricier couriers to help handle the glut.
“It put a lot of demand on our warehouses, we were completely full,” he said.
Mr. Olsavsky also pointed to “the demand from Prime members” because those customers generally don’t pay additional fees for shipping, meaning Amazon may foot the bill .
Amazon has worked to bulk up the $99 Prime membership with free goodies and exclusive offers not available to non-members. That includes its one-hour Prime Now delivery service andstreaming video content like original shows “Alpha House” and “Gortimer Gibbon’s Life on Normal Street.” Yet it hasn’t raised the Prime subscription price in nearly two years.
Mark Mahaney, an analyst at RBC Capital Markets, says the heavier shipping and fulfillment costs is actually a good problem because they resulted largely from excess demand, not because of any structural issues. Amazon “didn’t have the capacity to handle the demand and had to resort to less-efficient/more expensive logistic solutions, because [Amazon] refuses to skimp on customer satisfaction,” he wrote in a report.
Amazon, of course, has a grand plan to cut shipping expenses and lessen its reliance on UPS and others by taking more control over the logistics. In the past year it has experimented with new ventures like citizen deliverers, drone delivery and even leasing airplanes to shuttle its own goods around the country.
Mr. Olsavsky noted in the same call that during the busy holiday season, Amazon had to take matters into its own hands when its contractual partners, such as UPS, FedEx and the U.S. Postal Service, couldn’t handle it all. “And those carriers are just no longer able to handle all of our capacity that we need at peak,” the CFO said. “ W e have had to add some resources on our own.”
Written by Greg Bensinger of The Wall Street Journal
(Source: The Wall Street Journal)
As reports of exploding hoverboards continue to mount, the US Consumer Product Safety Commission is continuing to investigate. In an update posted yesterday, the Commission said it continues to look into “a number of companies,” but meanwhile dropped a bit of news for consumers: Amazon will refund hoverboards.
Amazon hasn’t released a statement.
“For consumers who purchased a hoverboard from Amazon, they can return the product right now for a full refund,” Commission Chairman Elliot Kaye writes in the statement. “I want to commend Amazon for voluntarily stepping up, providing a free remedy and putting customer safety first.”
Kaye points consumers to Amazon’s contact page for more information on the refund, but no particular brands of hoverboard are specified in the statement, nor were any other possible restrictions on refund eligibility. Amazon has yet to make a statement of its own about the apparent refund.
Amazon had previously encouraged hoverboard buyers in the UK to throw out boards with “non-compliant UK plugs” in exchange for a refund. Last month, the company also pre-emptively took hoverboards off its shelves until companies proved they were compliant with safety regulations.
Written by Colin Lecher of The Verge
(Source: The Verge)
Amazon will drop the price of a Prime membership to $73, down from $99, this weekend.
The reduction is to celebrate Amazon winning two Golden Globe awards for its series Mozart in the Jungle.
The promotion will run from 9 PM PDT Friday through 11:59 local time Sunday night, the company said.
Amazon is also allowing anyone to stream both the first and second seasons of the series for free over the weekend.
Amazon Prime offers free two-day shipping on millions of items purchased through its website, as well as free access to services including Amazon Instant Video and Amazon Music.
Mozart in the Jungle is a comedic drama set in the New York classical music scene.
The series won the 2016 Golden Globe award for best musical or comedy series. Its lead star, Gael García Bernal, won for best actor in a musical or comedy series.
Given for excellence in film and television, the Golden Globes are awarded by the Hollywood Foreign Press Association. This was the 73rd annual award, hence the $73 price tag.
This isn’t the first time Amazon has offered a special Prime price to celebrate winning awards for its programming. In September, it made Prime memberships available for $67 when it won five Emmys for its showTransparent in the 67th annual Emmys.
Written by Elizabeth Weise of USA Today
(Source: USA Today)
NEW YORK — Amazon.com is getting into the holiday spirit, adding booze to its one-hour delivery service in Manhattan.
Until now it was only people in Seattle, the company’s hometown, who could imbibe within 60 minutes via Amazon. The company would not say Thursday if it was expanding that convenience elsewhere.
One-hour delivery of beer, wine and spirits costs $7.99. It’s free to members of Amazon’s $99 annual Prime loyalty program who can handle a two-hour wait.
Alcohol is one of 4,000 new items the online retailer just added to its Prime Now delivery, in addition to toys, electronics, wrapping paper and baking supplies. There are already more than a million things that can be delivered by Amazon in 20 U.S. metropolitan areas.
Written by Associated Press
Amazon goes to great lengths to get packages into customers’ hands as quickly as possible — even if it means employing drones. Those efforts will now include putting thousands of Amazon-branded trucks on the road.
The ever-ambitious online retailer planned to announce on Friday morning that it had purchased “thousands” of trailers — the part of a tractor-trailer that stores the cargo — to make sure it had the shipping capacity to move products on time as its North American business continues its rapid growth.
The trailers won’t be used to deliver packages to customer doors. Instead, they’ll be utilized to transport items from one Amazon warehouse, known as a fulfillment center, to another, as well as between fulfillment centers and sort centers, where Amazon organizes orders by zip code to be delivered to local post offices. A spokeswoman stressed that Amazon would continue to rely on existing trucking partners, which own and drive the tractor portion of the vehicles that will tow the Amazon trailers.
“The reality is we utilize a lot of great companies, but we do see the need for additional capacity,” she said.
The announcement comes as Amazon’s North American retail business is growing at its fastest clip in several years. Revenue for this unit grew 35 percent in the third quarter, fueled by product assortment expansion in categories such as apparel and the growth of Amazon’s hugely popular Prime membership program.
The trucking announcement marks the latest initiative aimed at taking more control over how quickly the company can get goods into the hands of its customers. While Amazon continues to utilize trucking partners to move goods within its warehouse network, and UPS and FedEx for package delivery to customer doors, it is increasingly unveiling initiatives to take over more of these functions.
In Los Angeles, for example, Amazon has been partnering with local courier services to deliver both traditional goods as well as groceries to customers instead of utilizing UPS or FedEx. Its year-old Prime Now service, which offers delivery within one or two hours of ordering, is also operated by couriers as well as independent contractors who want to make a little extra money. Amazon also delivers groceries in some cities in its own Amazon Fresh trucks and in recent years has paid the United States Postal Service to deliver Amazon packages on Sundays.
Former employees say the goal is to someday be able to circumvent UPS or FedEx entirely, in large part so that snafus like the one that caused late deliveries during the 2013 holidays don’t happen again.
One guess on why Amazon only wants to own the trailer at this point: If it owned the tractor, it would have to register as a commercial trucking company and incur the insurance costs and liability risks that come with that. By sticking with just the trailer body, Amazon potentially saves money and avoids other potential headaches. That said, some reports suggest Amazon may eventually go all the way and own the trucks, too.
The news is expected to come at an event in Chicago at which Amazon would announce the donation of 2,000 packages to U.S. military members stationed in combat zones around the globe.
Written Jason Del Rey of Re/Code