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Ok, so now with time to read the earnings report, here's the deal.

First, revenues are rising as reported but expenses are going up even faster.  Notable places where expenses are exceeding revenue growth rates include:

Stock-based compensation up 31% (!) y/o/y

PPE purchases are up 50% (yikes!) compared against same-quarter last year, and capital lease additions doubled.

Shipping expenses are up 30%.

Marketing is up 40%.

Tech and content is up 40%.

In short -- sweet Jesus, these guys are burning money like it's newspaper in the fireplace!

The only good news is that the cost of goods sold is up 20%, but revenue was up a bit more, so they're driving cost.  Of course that's bad for their vendors; they're getting squeezed.

Now here's the kinda-ugly on the sales side.

International is slowing -- it's up 18% on sales while domestic is up 26%.  But, remember, we were told international was going to save the day!  Uh, that's the same change y/o/y from last quarter -- no improvement in either domestic or international.

If you remember my previous reporting one of the places I watched very, very carefully was media.  The reason is this -- media is a high-margin business, electronics and general merchandise is a very low margin business.

So how's that working out?

Well, domestically media is growing 13%, while merchandise was up 29%.  Internationally it's much worse; media is only up 7%, and those are y/o/y comparisons on the quarter.

The bad news is that media decreased both domestically and internationally on the quarter!  In fact, it was down 13% domestically and 10% internationally.  OUCH.

The electronics business was also down internationally by 5%.  What made up for it was a 7% increate in (zero or even negative margin!) electronics and merchandise sales in North America.

This is crap performance, in short; media sales, which is where the margin is, in fact contracted on the quarter both in North America and internationally, and general merchandise was down sequentially internationally as well!  Of goods sold only merchandise in North America advanced on a quarterly basis.

It's worse when you remove the effect of exchange rates (which helped internationally.)

Operating margin has gone in the toilet as well and is in fact negative -- no surprise given the monster cost ramps compared against revenue.

Amazon is a huge firm that despite all the claims they would turn the corner, smash their competition and make an unbelievable amount of money they have failed to deliver on that promise for more than 10 years serially.  Costs continue to rise in several areas at rates exceeding sales and there is no margin improvement in sight.  In addition their AWS services, which they have touted as one of their saving graces, has become embroiled in a price war and they're spending on PPE (probably for that service although I'm sure distribution is part of it) like a drunken sailor while having to continually slash pricing to obtain customers.

We've heard for years that Amazon was "investing" and that investment would reap rewards.  I see no improvements on an annualized basis in terms of growth rates against 2013, the company has its strongest unit growth in sales in areas where they make little, nothing or actually lose money when fulfillment costs are included and worse, their "cloud" service has become embroiled in a commodity style "race to zero" pricing paradigm and yet they're still committing to spend like crazy on it.

I know what we'll do!  We'll lose money on every sale but make it up on volume!

This is a company with no justification for a stock price anywhere near where it sits, even given the well-justified implosion after hours.  If there was any reason to believe they could stem the price:cost problem with AWS that is spiraling out of control and stop fulfillment and marketing expense from rising faster than revenues there might be an argument for the stock to sell around $100, which would give it a forward P/E of about 30.

Unfortunately as it stands, given what is now a multi-year series of false dawns and promises that are never fulfilled to actually find a return on all this cash plowed back into the business, along with the apparent detonation of their cloud service cost:price structure due to massive slashing of prices (which one can presume is necessary to attract and retain customers) the stock is not worth $30/share.

Good luck if you're long.

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Big, big loss.

I'll be going through this later, but my first blush is that this report just plain sucks on the EPS side, and the guidance sucks too.


But but but.... sales tax wasn't going to kill them!  Uh.....


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And another one....

Milk, cheese, butter, cream - in fact all saturated fats - are bad for you. Or so I believed ever since my days as a medical student nearly 30 years ago.

During that time I assured friends and family that saturated fat would clog their arteries as surely as lard down a drain. So, too, would it make them pile on the pounds.

Recently, however, I have been forced to do a U-turn. It is time to apologise for all that useless advice I've been dishing out about fat.

Just apologize eh?

How about all the people you "assured" who took your advice as a claimed professional, complete with the monopoly to prescribe and call yourself "doctor", charging a fee for said advice and shout down those who disagreed with you, and were objectively harmed as a consequence?

Everyone has a right to be wrong.  But there's something different when opinion isn't just opinion, it's presented as fact, backed up with government force -- and it turns out that it was deception instead.

Reluctantly, I said goodbye to beef, switched to skimmed milk and avoided yoghurt with any hint of fat. It made for a much duller diet, but at least I was healthier. Or was I? Well, no. I kept this up for the next few decades - and the results? I put on over two stone, despite regular exercise. My cholesterol soared past the healthy range and two years ago I discovered I was borderline diabetic.

Yep.  So not only did you parrot bad information you took it yourself, it didn't work, and what was the response?


Where is the accountability Michael?

And what about the millions of people who have been rendered sick -- or dead -- as a consequence of this so-called "medical advice"?  Advice that, it turns out, fattened wallets of both frankenfood makers and drug companies, effectively forcing consumption of medical services that would have otherwise not been required, along with incurring an incredible amount of human suffering -- that is, actual physical harm.

I see nobody taking that issue on.

But we damn well should.

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Sorry folks, but a degree from this "University" just was devalued to zero:

Especially shocking is the language about “equity” in the distribution of grades. Professors, instead of just awarding the grade that each student earns, would apparently have to adjust them so that academically weaker, “historically underrepresented racial/ethnic” students perform at the same level and receive the same grades as academically stronger students.

Got it?

It no longer matters if you earn a grade if you're a member of a "protected class."

Therefore there is no option (since one cannot legally blackball minority graduates from UW-Madison who would receive such "unearned" grades) but to blackball ALL UW-Madison graduates.

Congratulations UW-Madison -- you just made your "degree" worth zero since it is no longer possible to rely on your granted credential as an actual indication of knowledge of the material.

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(Skip ahead to 15:00 if you just want my segment)

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