Amazon’s CFO Tom Szkutak is speaking at a Bear Stearns retail conference this morning. He reaffirmed Amazon’s full-year guidance (Amazon has been hammered over the past few weeks on concerns about the company’s quarter).
More detail if we get it. Webcast available here. Warning: Have a stiff cup of coffee before you tune in, or soporific Tom will have you snoozing in 30 seconds.
What is cushion in guidance for recession?
Not updating guidance. Guidance Jan 30 grow between 26%-33% for year. Grew 39% last year. Pricing, prime, new categories all helping. Our guidance what we saw at time we gave guidance. (Translation, does not include horrific recession).
How account for 3rd party sales?
We are not seller of record, we don’t take title to inventory. We charge fees for fulfillment, get a commission for sale.
Prime: Does it make economic sense for customer?
Customers like getting things fast. We’re getting bigger share of wallet. We think they’re getting great value. Launched in three new geographies in 2007.
Web services business: Impact on Free Cash Flow?
This is tech we build for ourselves anyway. This just allows us to monetise. It is very early (re financial impact).
What do you mean when you say “Most customer centric company on earth”?
Good customer experience, yada yada yada. Lots of customer-facing metrics. Trying to get better every year in fulfillment, web site, detail pages, etc. Trying to make it easier for sellers to sell (fulfil by Amazon).
Where are you on 100%+ ROIC goal?
We have high returns on capital. Goal is to maximise free cash flow and free cash flow per share.
Gone very well. We are sold out. Continue to scramble to improve production so we can deliver. It’s on a first-come, first-serve basis. Goal to be back in stock and be shipping next day… Like what we see so far. Over 100,000 titles today, continuing to expand that number. People are buying content and using their devices. An extremely convenient way to read digital text.
New categories impact on gross margin?
Depends…want excellent pricing on Day One. We’re not buying at scale on Day One, so very low gross margin. These evolve over time.
Discipline of getting out of new categories if don’t go well?
Usually it’s not a category we’ll exit. But sometimes we find we can’t be competitive long-term, great pricing on particular skus, we won’t sell them. Sometimes third-party sellers will sell. We want to make sure we help customers make their purchase selection.
Free cash flow: Stretching payables well will run dry at some point. Where do you stand on that?
Payable days and better pricing with suppliers…room in all of the categories to improve our overall terms with suppliers. The categories we’ve been in the longest we still have opportunity, but less than in the newer categories.
Can you improve at same rate as last year?
No specific guidance. Not just payable days. Also co-op dollars, pricing, etc. Still opportunity to get improvement.
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