Feeds

back to article Amazon's profit-eating machine revs into overdrive

Shares in e-retailer Amazon inched down over 2 per cent in after-hours trading after the company reported a net loss in its second quarter and forecast problems in its third quarter, currently underway. Amazon's great profit-eating machine was on full display on Wednesday, when the mega e-tailer's vast revenues failed to stop it …

COMMENTS

This topic is closed for new posts.

?

So is Amazon "spending the year dead for tax reasons"?

4
0
Happy

Re: ?

I thought that the idea is to report as little profit as possible (preferably a loss) in order to avoid paying any tax? Of course the company is still raking it in, just not accounting it as 'profit' (those yachts aren't cheap to run you know ;-)

1
2
Anonymous Coward

what's the 50th biggest river in the States ?

While I appreciate the journalistic tendency towards hyperbole, Amazon's revenue is neither 'whopping' nor comparable in class to the eponymous river.

Their revenue barely makes the top 50 companies in the states .. to say nothing of globally

1
1
h3
Bronze badge

Re: what's the 50th biggest river in the States ?

For now. It will change and by being first and the biggest when it comes to their cloud stuff it will make them a fortune.

They have produced something totally new (Kindle / AWS) more than once and made it into something worth having that everyone else has tried to copy. (Same as Apple to a point although Apple generally just refined something someone else had tried already).

Compare to Microsoft who's only real success of a new product (Xbox) cost them an absolute fortune.

2
1
Gold badge
Unhappy

Re: what's the 50th biggest river in the States ?

"They have produced something totally new (Kindle / AWS) more than once and made it into something worth having that everyone else has tried to copy. (Same as Apple to a point although Apple generally just refined something someone else had tried already)."

Indeed.

And the biggest data flow the NSA has ever seen.

0
1
h3
Bronze badge

Be hard to complain about them not paying enough tax when they are not profitable.

I suspect they are spending significant amounts of money and could be profitable if it was in their interests to be.

I think they do the right thing. (Only tech company that chooses to screw over anyone other than the customer which is to be commended.)

They also don't only think about the short term but they are not being totally stupid about it. (Like the 360 and PS3 were).

They could contribute something to Xen but other than that I am not too bothered. (They annoy me far less than places like Currys / Dixons / PC World etc etc).

1
3

It could be that the UK operation is profitable and it's unrelated operations in other parts of the world that makes the loss. In this case the UK operation should still be paying corporation tax.

In addition Amazon should be paying VAT at the UK rate (20%) but instead only pays 3% as it manages to pass all its UK trade through Luxembourg and pays there instead. Of course it still charges us punters the full 20%!

Despite the headline loss, there is still a very good argument that Amazon should be paying taxes in the UK.

3
3
FAIL

Don't blame the companies, blame the governments who make the laws, or in some instances the governments who allow the EU to make laws for them.

5
2

They're avoiding double taxation

If they pay VAT in the UK, then they will get taxed again when they pay dividends. By passing profits through Luxembourg they are doing the right thing and not being taxed twice.

1
1
Gold badge
Unhappy

@Keef

"Don't blame the companies, blame the governments who make the laws, or in some instances the governments who allow the EU to make laws for them."

RAther, blame the partners to the big 5 accountancy firms who advise the HMRC on their tax laws and then return to the big 5 accountancy firms on the laws they helped "advise" on on.

Can you say "conflict of interest?" Can you say "Breach of proffessional ethics?"

1
1
Bronze badge

Re: They're avoiding double taxation

Dividends? Amazon?!!

Have I sidestepped into an alternate universe?

0
0

Ever heard of VAT. If they paid a measly 10% of VAT they would have had to cough up over $6B last year. Puts their "losses" in perspective, IMHO.

0
0
Silver badge

aggressive market building

Amazon made losses for the first 6 or so years by cutting process so aggressively it starved the market of viable competition. They're doing the same with AWS, probably where the money is going right now, along with some nice salaries and bonuses. I don't honestly feel 'poor them' when I hear this, clearly they are making money somewhere or they'd stop trading, you can hide a lot with the right accounting.

2
0
Bronze badge

Monopoly

The way you win at the Monopoly game is to buy everything you can get your hands on. You start with the cheap properties just past Go. Buy all four railroads and both utilities. Nevermind the blue and green stuff that you find on the Go side of the board.

Amazon is playing Monopoly for keeps. The only competition they have is Apple. The only publishing outlets that authors have anymore are, guess who, Amazon and Apple. So far, so good. Amazon has made it far easier for new authors to get published, but that is offset by its policies that also make it difficult for the newcomers to make money off of their writing. Apple, on the other hand, has made it very difficult for authors to get started, but once you do get onto their sites, you are in reasonably good shape because you have fairly high quality neighbors.

1
2
Silver badge

Re: Monopoly

A lot of indie writers are doing very nicely thank you out of Amazon. So I'm not sure where you get the idea they make it hard.

Amazon certainly make it easier to make money out of writing than traditional publishing ever did.

You still need a combination of luck, determination, and the common touch to make a living wage. But it's no exaggeration to say that Kindle has completely transformed some of the genre markets, including romance, erotica, some SF&F, mystery, and so on.

Apple have better technology, but a much smaller share of the market. Book apps sell much better than iBooks do. Medium term it's not obvious that iBooks are worth the effort, even for glossy interactive projects.

1
0

Oh come one now

I don't shop at Amazon precisely because they've rarely turned a "profit" for tax purposes, bizarrely, I've now discovered it's actually generally cheaper to buy my books elsewhere, Sainsbury's Entertainment tend to be pretty cheap plus they pay tax, have free delivery and the same pre-order guarantee as Amazon (lowest price).

0
0

re:They're avoiding double taxation

Except no company pays VAT - it's always the customer.

0
0

bit of a coincidence really

I find it amazing that with that HUGE revenue, their expenditures match to within a couple of percent. It could have gone a billion either way... I guess it must be pure luck.

1
0
WTF?

Buy & Large does it again.

Are they investing their profits or removing them through a stream of price cuts? It's pretty hard to tell from their accounting. I thought the whole point of predatory pricing legislation was to stop companies using core business to bankroll "no profit" expansion into new markets with a view to closing down the competition, how is this massive company able to keep expanding into new markets, turning over billions and reporting essentially no profit quarter after quarter without any questions asked?

1
0
FAIL

Re: Buy & Large does it again.

...and when someone (Apple/iBooks) does try to break their monopoly, the DoJ roll in and declare that it's illegal...

0
0
This topic is closed for new posts.