WSJ's praise of AMZN# Stock
L*n
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Though less than 3% of sales today, Amazon.com's "cloud computing" Web-
services business could become as big as its retail business, says the CEO.
With that in mind, the unit, which rents out capacity on Amazon servers, has
been a key beneficiary of Amazon's tripling in capital spending this year,
the company said Thursday.
That spending is squeezing free cash flow, so investors are hoping for big
returns long term. They may not be disappointed.
Like its Internet-retailing business, Web services is high volume and low
margin.
Customers using Amazon's Web servers pay pennies on the dollar relative to
what they might pay to buy their own gear. A recent example is Legalprise, a
Florida start-up that tracks court records.
Amid the current legal brouhaha over foreclosure documentation, it needs
more than 100 servers of computing power over the next few weeks. Using
Amazon servers will cost under a thousand dollars, says co-founder Michael
Olenick.
Still unclear is whether large enterprises will outsource significant pieces
of their IT budgets. And while IDC puts cloud-computing growth at 27% a
year through 2014, Amazon Web Services will have to grow much more quickly
to catch up to Amazon's fast-expanding retail business.
==============================
after ER on Thursday night, AMZN was sold off quite sharply, only to return
the next morning and charged up higher on huge volume. What sited as the
possible reason of sell off was depressed margin. This could be the reason
behind the dramatic turn around.
Though less than 3% of sales today, Amazon.com's "cloud computing" Web-
services business could become as big as its retail business, says the CEO.
With that in mind, the unit, which rents out capacity on Amazon servers, has
been a key beneficiary of Amazon's tripling in capital spending this year,
the company said Thursday.
That spending is squeezing free cash flow, so investors are hoping for big
returns long term. They may not be disappointed.
Like its Internet-retailing business, Web services is high volume and low
margin.
Customers using Amazon's Web servers pay pennies on the dollar relative to
what they might pay to buy their own gear. A recent example is Legalprise, a
Florida start-up that tracks court records.
Amid the current legal brouhaha over foreclosure documentation, it needs
more than 100 servers of computing power over the next few weeks. Using
Amazon servers will cost under a thousand dollars, says co-founder Michael
Olenick.
Still unclear is whether large enterprises will outsource significant pieces
of their IT budgets. And while IDC puts cloud-computing growth at 27% a
year through 2014, Amazon Web Services will have to grow much more quickly
to catch up to Amazon's fast-expanding retail business.
==============================
after ER on Thursday night, AMZN was sold off quite sharply, only to return
the next morning and charged up higher on huge volume. What sited as the
possible reason of sell off was depressed margin. This could be the reason
behind the dramatic turn around.
