Why Amazon Doesn't Care Much About Wall StreetAmazon (AMZN) disappointed Wall Street on Wednesday, but the company doesn't much care.

Amazon's biggest growth spurt in more than a decade chewed up its third quarter profit margins. Net income sank 73% to $63 million from the year ago period, as expenses from growth initiatives, such as the Kindle Fire tablet computer, ate into the bottom line.

Earnings missed analysts' estimates and disappointed the investment community. That's OK by Amazon. The online giant is an iconoclast in the retail sector: a public company that acts like a private firm, more concerned with long-term growth and taking risks than appeasing the folks on Wall Street every quarter.

Amazon's renegade retail status largely reflects the corporate culture established by its off-beat CEO and founder Jeff Bezos. The company's business philosophy champions long term thinking, a willingness to invest in inventive thinking that might at first seem impractical, and "a willingness to fail and be misunderstood," Bezos said, during a summit held this Spring by ShopSmart, Consumer Reports' shopping magazine that was attended by DailyFinance.

Bezos' leadership reminds us of another CEO who went against the grain, took chances and aimed to "think different": Steve Jobs.

"They don't worry about current profits," said Craig Johnson, president of retail consultancy Customer Growth Partners.
"They're more interested in building long term customer loyalty."

That played out in the third quarter when even though the company's delivery and distribution costs rose significantly, Amazon managed to generate "stunning," 44% sales growth by holding the line on delivery costs to the consumer, Johnson said.

During the third quarter, Amazon racked up expenses from building sales fulfillment centers and launching new Kindle products, including the Kindle Fire. At $199, it's Amazon's lower-priced answer to the Apple (AAPL) iPad, which starts at $499.

Sales of the Kindle Fire are on fire, said Bezos, in a statement. In turn, "we're increasing capacity and building millions more than we'd already planned."

Still, Johnson bets the Kindle Fire is a loss leader. But it's more important to Amazon to stake a claim in the tablet market than make money on the product, he said.

With growth comes growing pains -- and Amazon is just fine with that, Thomas Szkutak, chief financial officer, said during a conference call with analysts this week.

"Every time you do something new -- like the electronic book, when we tried to drive down the price point [of a book] -- and some people didn't like that," there's the potential to be misunderstood, "and you have to be okay with that," Bezos said.



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milofilomay

Who cares what wall street says ? They are now a socialist entity ! They took government bailouts and yet to pay it back ! More companies should care a less about the so called investors ? One thing wall street needs to understand ! America hates you more than the congress ! Your way of doing business is a broked business model People , companies and the government should turn their backs to wall street ! I mean they do not even help the GDP because they suck money out of companies for no reason but to kill them ! What a useless entity ...

October 29 2011 at 3:22 PM Report abuse rate up rate down Reply
tmlbtb

Bravo Amazon! If more companies thought like this we would be in better shape. Wallstreet is an old boyz network who has very old ideas.

October 27 2011 at 5:55 PM Report abuse +1 rate up rate down Reply
dabrownman

Amazon is another Netflix. Just like Salesforce.com and Apple,

October 27 2011 at 1:19 PM Report abuse rate up rate down Reply
Flipider.com

Amazon? Greek Mythology! and there so large too. Sellers selling other sellers. By the sea shore with 4 stars seller rating.

October 27 2011 at 1:12 PM Report abuse rate up rate down Reply
zonel

Amazon may not care about Wall Street but with it selling at something like 120 times earnings Wall Street certainly cares about Amazon.

Whether you think its a good company or not or whether the kindle fire will be profitable in the long run (doubtful but certainly possible) its an overpriced stock that will one day come to grips with reality.....

October 27 2011 at 1:01 PM Report abuse -1 rate up rate down Reply
Hi Nancy

I am a proud Amazonian and have been working with them for three years.....Amazon goes outside the box of thinking and does think long term. Sure my stocks fell, my 401K took a hit but I know that with all the facilities they are building and jobs they are creating I have nothing to worry about in the long term. So all you shoppers out there....hit Amazon first before you "go" out in the cold, rain or snow and hit place order...let it come to you instead of you going to it and spending more than what you should......

October 27 2011 at 11:15 AM Report abuse +1 rate up rate down Reply
thagrus

Wall street just cares for wall street

October 27 2011 at 11:04 AM Report abuse +4 rate up rate down Reply
Morris Cantonitis

America -

It's time to sue your weapons on these PIGGS and their PIGG children.

Russia, China

NUKE THESE PIGGS

October 27 2011 at 8:33 AM Report abuse -2 rate up rate down Reply
1 reply to Morris Cantonitis's comment
thagrus

Someone break the bong

October 27 2011 at 11:10 AM Report abuse rate up rate down Reply
Morris Cantonitis

All Attorney's interested in contributing to the lawsuit may conatct us at wallalleypigg@yahoo.com.

NYC GETS NUKED

October 27 2011 at 8:32 AM Report abuse -1 rate up rate down Reply
1 reply to Morris Cantonitis's comment
thagrus

What you been a smokin morris?

October 27 2011 at 11:09 AM Report abuse rate up rate down Reply
Morris Cantonitis

300,000,000 OCCUPIERS find the U.S. , SEC and FED Reserve and Financial Agencies GUILTY of failing to protect Americas & The World’s investments from Predatory Wall Alley PIGGS.

Fidelity, E-Trade, Wells Fargo, Ameriprise and more are being sued by American investors for hundreds of million of dollars for not only failing to protect, but contributing to the looting.

October 27 2011 at 8:23 AM Report abuse rate up rate down Reply
1 reply to Morris Cantonitis's comment
thagrus

Morris turn your damper down.

October 27 2011 at 11:08 AM Report abuse rate up rate down Reply