Jeff Bezos: Dr. Evil of the Internet

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Amazon got pummeled last week, but it all seems part of Jeff Bezos’ master plan.
jeff-bezos
Investors punished Amazon.com (NASDAQ: AMZN) last week, dropping the stock nearly 10% on Friday as it announced mounting losses.
For the third quarter, Amazon reported a net loss of $437 million compared to a net loss of $41 million in the third quarter of 2013.
That sounds bad. Really bad. But is it?
It all depends on your perspective.
After all, when has Jeff Bezos and Co. ever said that profits were their priority?
Admittedly, this stock is not for everyone. If you just look at the income statement, get out. You will always be disappointed.
You have to dig deeper… Actually, scratch that. You don’t have to dig that deep. Just read the second paragraph of the company’s earnings press release last week:
Operating cash flow increased 15% to $5.71 billion for the trailing twelve months, compared with $4.98 billion for the trailing twelve months ended September 30, 2013. Free cash flow increased to $1.08 billion for the trailing twelve months, compared with $388 million for the trailing twelve months ended September 30, 2013.
Those are great numbers.
In fact, earnings have treaded water since 1997. Yet the cash flow from operations has rocketed from $700,000 to more than $5.7 billion.
It’s cash flow that is the engine fueling Jeff Bezo’s master plan for world domination. He’s like the Dr. Evil of the Internet.
Who knows what drives him. Maybe his prom date stood him up and this is payback. Maybe he was bullied in the 6th grade and he is still working on getting the last laugh.
Maybe he’s just a great entrepreneur whose vision is boundless. Because make no mistake about it, the $137 billion Amazon still operates like a start-up.
The mission is to grow and expand, rinse and repeat. And oh has Amazon succeeded at that.
I say this somewhat grudgingly. Like most investors, I missed out on most of the 19,643% share price increase since the IPO. I lumped it in with the Pets.com of world back then. I didn’t buy my first Amazon shares until 2005.
Amazon’s corporate mission is big. It’s always been big. Bezos didn’t name it after the Winooski River in Vermont, after all (Sorry, only our staff at Wyatt HQ are going to get that joke).
Yes, I was late to Jeff Bezos’s world-domination party.
I imagine him sitting there in his office after his conference calls with analysts, cackling maniacally, “Oh wait, they’ll see. I’ll show them.”
And he has shown us. In nearly 20 years, here’s just a few of the things the company has become:

  • The world’s leading online bookseller
  • The leading seller of digital books through its Kindle device
  • A pioneer in Kindle Direct Publishing
  • A cloud computing giant with its AWS division, which most other tech companies are building on
  • A media company producing its own content
  • A membership organization with Amazon Prime ($100 a year)
  • The seller of Fire tablets, Fire TV, and the Fire phone (even if the latter has flopped so far)
  • A distributor of third-party goods via its Amazon Marketplace
  • And of course, an online retailer that sells everything from dog food to patio furniture to flat screen TVs.

Jeff Bezos is always one step ahead of us.
Who knows what drives him. It’s certainly not profits. Not yet.
I have a small amount of money invested in Amazon. This stock is one of those stocks that I intend to keep forever.
With e-commerce still only accounting for only about 6.4% of total retail sales in the U.S., there’s plenty of room to grow.
I’m probably in the minority here. I know my boss, Ian Wyatt, wouldn’t touch this company with a 1000-foot pole.
I may have to wait for Bezos to step out of his secret lair to announce his retirement.  Perhaps then the growth initiatives will come to an end, and the company can finally start to reel in its profits.
But it’ll happen one day.
Maybe after Bezo’s cryogenically frozen brain is floating in orbit on the Amazon Space Station, he’ll look down on Earth, smile and say, “OK, it’s time to just start collecting all that dough and reap the rewards of seventy years of hard work.”
We’ll see. You have to decide if you can wait that long. If you can’t, exit the stock. If you can, expect a continued wild ride.

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