Amazon Lays an Egg in 3Q, Plans Lunar Expansion

Amazon moon

Amazon:   Breaking ground soon on lunar distribution center.

In an outlandish presentation that had attendees reeling in disbelief and ended just moments ago at Amazon.com’s (ticker AMZN) Seattle headquarters, CEO Jeff Bezos introduced the e-tailing giant’s next initiative.  And, if you can believe it, he did it while wearing a space suit:

“At Amazon, we believe in the future of the moon.  And so, we will break ground on construction of our first distribution center on the moon next quarter.  In the first half of next year, we will also begin construction on our first Lunar Amazon Residential Kommunity also know as LARK.  Obviously, this will be an expensive project, which will put pressure on earnings the next several years.  But we expect to be net income positive by sometime around the year 3000.

The presentation did not start auspiciously.  At about 10:30 AM Pacific Time, an individual, suspended above the stage in a futuristic-looking chair, clad head-to-toe in what resembled an astronaut’s uniform from the Apollo missions of the late 1960s, was slowly lowered to the floor.  The audience- reporters, analysts, et al- was stunned.  Unfortunately, the problems started right away when the performer tried to remove his helmet.  He struggled alone on stage for what seemed like an eternity but was probably only two minutes.  The audience, laughing nervously, played along.  But when the person began flailing in an increasingly dramatic and panicky manner, audience members started to look about, getting worried, no longer sure it was a joke.  By then the spaceman was writhing on the ground, and several audience members bolted to the stage.  They struggled with his helmet and finally removed it to reveal a gasping Jeff Bezos.

Just like any new product, we’re still working the kinks out of these suits,” said an empurpled, panting Bezos to the flabbergasted audience.  And then, as if nothing had happened, he launched into his prepared remarks.

Today’s announcement might distract investors from yesterday’s awful 3Q earnings release.  A net loss of $437mm (vs. a net loss of $41mm y-o-y) was the company’s largest quarterly loss in 14 years.  Revenue was up 20% to $20.6 billion but was still below street expectations of $20.8 billion.  Amazon took a $170mm charge on its Fire smartphone, which after four years of research, launched in July.  Two months later, the Fire’s price was slashed to near zero on two-year contracts.  Probably of greater concern, revenue guidance for 4Q, the company’s busiest quarter, was lowered to $27.3 – 30.3 billion vs. a street consensus of $30.9 billion.

About Amazon 3Q performance, the Wall Street Journal wrote in today’s edition:  “Amazon’s multipronged business approach makes it hard to gauge what will be the company’s core in the coming years.”

Well, now we know what the core will be:  Space.

To paraphrase JFK in a brilliant speech at Rice University in Houston, TX on September 12, 1962:

“We choose to go to the moon.  We choose to go to the moon in this decade and do the other things, not because they are easy, but because they are hard…

In Jeff Bezos’s case, he chooses to go to the moon because it’ll help keep Amazon doing what it does best:  Losing money.

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