The standard complaint against contemporary capitalism is that the corporates just pay out all their profits – and more – to shareholders. Leaving nothing to invest and thereby grow the economy. This is, of course, tripe as an analysis for the shareholders then have to make the decision of whether to invest or spend themselves. Rather than the corporate management. Same decision to be made tho’.
Then along comes Amazon. Which doesn’t pay out anything to investors. Stock repurchases about cover their equity payments to staff. No dividend. Historically they’ve taken all the profit they’ve made and reinvested it. They’re back to doing this again:
The latest results marked a return of an Amazon investors know well: a company reinvesting rising revenues in capital-intensive projects, from warehouses and data centres to physical stores and television and film production, at the expense of its margins. This time around, the profit squeeze resulted from a push to cut shipping times in half for members of Amazon’s Prime programme. Its goal was to juice spending on its website and see off competition. “It’s clear Amazon is in investment mode,” said Gene Munster, analyst at Loup Ventures. “Investors should hunker down for a prolonged investment period as Amazon continues one-day shipping rollout in the US and brings the service to international markets.”
There are points to be won from spotting the first retard to complain about these results from this policy. You know, someone whingeing that Amazon should really be making greater profits and doling less investment so as to well, something. Underpants maybe.