We are definitely focused on earnings. Amazon in particular because it's a big bell weather on so many different levels. Stucks down five percent tim in the after hour, the company sales forecast falling short of estimates, leading to a share drop. The guidance assumes one billion dollars of costs
those related to COVID nineteen. We know the company if we were to think about what it's been doing over the last sixteen months, just massive investments in trying to stay ahead of demand or keep up with demand, especially the early part of COVID nineteen. Earnings per share though for the second quarter Carol handily beating estimates, coming in at fifteen dollars and twelve cents of share, beating estimates of twelve dollars and eight cents. And I just wonder
if it's a readjustment as the economy reopens. Maybe you know, streaming and retailers are online retail just asn't happening. Let's get to our Bradstone. He is Senior Executive editor of Global Technology at Bloomberg News. He's in our San Francisco bureau. He is our go to. He's authored The Everything Store. He's got an update on that book. It's newest book is Amazon on Bound Jeff Bezos and the Invention of a Global Empire. It's a great book. Relove brad Stone,
M brad Stone down five percent? Is this? I'm how do you read this? Hi? Guys? First of all, thank you. Well. I mean, look, I've been covering Amazon for a long time. You know, they're they're always these these unexpected fluctuations, sometimes below expectations, sometimes above. You know, I read this is probably maybe a bit of an indicator that at least that at one point the pandemic for Amazon was ebbing and customers had more choices, right, and they were going
back into stores. Um, I think the company increasingly thinks they'll be shopping elsewhere, have other options, and so that's why the guidance for the third quarters a little bit weak. Um, you know, AWS basically hit its targets, so you know, the most profitable and powerful part of Amazon's business is forging ahead. But yeah, they're a little light here on net sales. Um, they've got that massive distribution center that's basically been a cost during the pandemic, and they're building
more from filment centers and distribution hubs. So you know, they missed a little bit, and there's a little bit of a course correction. But the one thing that I've learned covering Amazon is that today's course correction. You know, these things happen in the moment and then by the end of the week, everybody forgets about them, because, look, this company is growing much faster than retail overall. It's still selling hundreds of billions of stuff, Brad, I mean
the numbers. I always feel like there's a couple of companies like an Apple or Amazon, that their numbers are just off the charts. Yeah, I mean twenty seven percent growth for you know, a company that is valued at one point seven or maybe one point eight trillion dollars. It's still extraordinary. And look, I the earning stress came out.
I haven't completely digested them. But that other category where the AD revenue is tucked is you know, they've they've now twenty five years into the company's existence, are minting yet another powerful revenue stream. So it'll be interesting to see, uh, you know, so many things, including how that develops, what the FTC does with the proposed MGM merger um, and
then how Andy Jesse's leadership style diverges from Jeff Bezos. Well, let's talk about that a little bit, because this is we don't know if he's going to be joining the earnings call. Is Our Life blog points out Jeff Bezos hadn't joined an earnings call since two thousand nine, so it's not typical that the CEO for Amazon joints the company's earnings call. Um, what is the task that he has out ahead of him now to to continue with what Jeff Bezos did for for more than twenty five
years at Amazon. Yeah, I would put it into three buckets. Um. One is continuing uh to invent, to to nurture a culture of inventiveness. You know, in my two books, and particularly An Amazon and Bound as I as I went and kind of did the archaeology on projects like Alexa or the Amazon Ghost Store, it always starts with Bezos and an idea from Bezos, Bezos pushing a team, and you know Jeff isn't going away, but he's going to
be arguably less involved. So how does Jess continue to make Amazon an inventive company without the founder and you know, chief nerd in the halls the whole time. The second thing is corporate culture right. It's like, you know, we can argue whether Amazon needs to fix it, but certainly it needs to evolve it. You know, they have more than a million employees, lots of work work, warehouse workers feel trodden upon, You've got unionization efforts at the door.
So he's got to he's got to create a new contract with employees. And then the third thing really quickly is is just the antitrust scrutiny. Right, then Jesse will present a kind of humbler target, I think than Jeff Bezos, the richest guy in the world, but contending with basically attacks on all fronts from State A, G S to the FDC and d o J to the European Union, and a kind of growing bipartisan sense of the big tech companies have too much power and it needs to
be curtailed. Bred Amazon Web Amazon Web Services AWS is just a massive business and for years it's allowed Amazon to invest in in other things, those things like Alexa. Um, what is the next driver of profit at Amazon? Is there another AWS that they're working on? Is Alexa that you write about so much in your in your most recent book, is that starting to show results at least on the top line. Yeah, is alexis starting to show results? I mean, I think the answer to that is we
kind of don't know. Um, you know, they opaque right to the financial statements are opaque. Um Amazon alexis so tied in with other parts of the business. Um. Uh, probably not, I would say, I mean, maybe it's close to break even. But but you know, one thing that you mentioned is like AWS, it is quite profitable, but by and large goes to build more AWS. Right They're building data centers around the world, and you know, trying to expand into new services, making big investments in AI.
I think that the powerful kind of profit machine here is advertising, and those dollars are being used to buy UH, to license more TV shows and movies, to create more to buy MGM. And then there's lots of other things that we frankly don't know about. I mean, we do know that they've got a satellite initiative called Project Hyper that will compete with Starlink, by bunch of things in healthcare, probably a bunch of things in the device business, like
a home robot. They've been working hunt for a couple of years, but we don't quite know what the big next hit will be yet. How do you think what will be the role I guess is what I want to get to is of Jeff Bezos in this company. Obviously it's his baby. And even though he's stepped back and there's a new officially a new CEO, does he still kind of poke around, um Brad? Does he still kind of get involved in things? And will that be problematic to Jesse or is that necessary to kind of
keep Amazon being innovative in some ways? So, Carol, my perspective on this has changed a little bit. I was in the wonderful town of Van Horne, Texas last week to see uh Bezos blast off in the sky to um, let's just say, imaginatively shaped rockets, and one of the things he said, yeah, one of the things, we don't need freud here. I'm just gonna say anyway, Family Radio.
One of the things he said in that press conference is that he was going to spend the majority of his time on Blue Origin of Space Company and on the Bezos Earth Foundation excuse me. And it really made me think that he is giving Jasse the running room to go operate on his own, and then maybe he's going to minimize his time. He's a board member. He's the chairman of the board, but I don't expect him
to really be patrolling the hallways of Amazon anymore. So I think, you know that's going to be probably in some ways a blessing for Jazz gets to put his own stamp at the company, but you know, also a little bit of a curse, because obviously a lot of the success of Amazon over the past twenty five years derives from Bezos's relentlessness and the halo of the founder that he has at the company and how he manages
to push her forward. Because I do wonder is it more like an Apple that lost some of it's a lot of it's mojo when Steve Jobs left, although it's gotten it back under Tim cook in a big ways. It didn't lose its mojo, right, but it went through a period when he was gone that it was tough, or you know, even Microsoft and adjustment after Bill Gates, although it has definitely gotten its mojo back. I mean, I guess, how do we investors think about this company
longer term? Yeah? Yeah, you've defined the sort of bomber to Tim Cooks spectrum right where or the bomber de Satia spectrum? Where will Andy Jassy Land and we don't know, right, it's so early. Um, you know this, this this quarter isn't a great start at least with investors. But I'm sure Amazon is looking at it long term. And Jasse is a creature of Amazon. He's been there for more than twenty years. And as you say, Bezos isn't going away, um and and and says he will continue to work
on new things. So I don't know. I mean, I don't think investors um have any cause for concern. I think the big macro things are looking at or things like regulatory and and um, you know, whether Amazon can continue to hire and retain the best talent. Let's talk about that regulatory risk a little bit. What do you think is the biggest regulatory risk to to Amazon? Is it that regulators come in and say, you've got to spin off a wus as its own company. You've got
to spin off his appos as its own company. Is that what that looks like? Now, I'm pessimistic about that. You know, breaking up a company is a long, arduous process that ultimately happens in the courts. We have a conservative judiciary in the in the US that's already sent uh an FTC case against Facebook back to the agency. I think Amazon, actually, you know, despite maybe the political
coalition gathered against it, holds a lot of cards. And you know, if if if maybe by by legislation, uh the U. S. Congress, you know, demands that like Internet platforms can no longer um be both a seller and a market participant, you know, had the platform and be sellers.
You know, Amazon is just gonna adjust. They're gonna do things like, um, you know, demand that their sellers, uh, instead of being independent third party merchants, sell them the merch nights and then operate like a more conventional retailer. So I actually think there are ways that the company
can adjust. I think on the margins. Maybe that some of the things that they do, the more controversial things like demanding sellers give Amazon the lowest price, or harvesting the third party data from sellers to decide what to put in private label. I think we might see Amazon walking away from some of those things, But I don't know that that necessarily hurts the company's financial prospect in the long run. Hey, Bread, is there anybody that Amazon
looks over the shoulder at. I mean, it's hard to even imagine, But is there anyone globally that they keep an eye on as someone who could start to really significantly eat into them more largely as a business. And I know they're They've got multiple businesses, but I'm just wondering who I always think about when I think about a company, who are they looking at you over their shoulder at right? And I think it's it's different companies
in different pockets of their business. This company now does so much, but in an entertainment it's now Netflix and Disney and Discovery with the recent deal, um and and Apple, And in retail increasingly Shopify with just catering to brands UH and in aws it's Microsoft and Google. So you know, in a way, and this is probably one of its strong arguments. Sure, I gotta jump in President by getting
ready to make some comments. Bradstone, though, thank you so much time and we so appreciated a Bloomberg News