Let me get this straight..

"Today, the world's most famous online retailer announced second quarter profits of $78m, a 257 per cent leap from the same quarter last year, and net revenues of $2.88bn, a 35 per cent increase."

They are losing! They have been losing all along!

The company should have died years ago. If it was not connected to the stock market it wouldn't have gotten past the first year.

Of course all the major business are no longer sustainable. It's a giant race to the bottom where everyone loses.

I live in Seattle where Amazon (along with Microsoft) gets news coverage with every quarterly report with the headline "Amazon Finally Profitable!" This has of late become quiet. What the reporters fail to mention is that Amazon up until last year has been using pro-forma accounting. Which was prominently and multiply stated on the introductory pages of all their quarterly reports.

Late last year (or early this year) I had to search for the phrase "pro-forma" in their full report and found it only once. That was in a passage which stated that earlier reports used pro-forma reporting but this one incorporated all previous accounting in this "real" quarterly report.

..Not yet formally verified by the independent accountants of course.

Yes. Anyone can have impressive sales by giving stuff away.

Oh yes. Quite some time ago, the Motley Fool put up a prohibition towards its members as they didn't want to see any more postings as to why Amazon is a bad business model.

Hmm.

If their investment tips are so good, why do the owners need to go out and give paid lectures to earn a living?

Oh well, that's enough ranting for now.

"If their investment tips are so good, why do the owners need to go out and give paid lectures to earn a living?"

Maybe their getting bored between sitting on their sun loungers and drinking Tom Collins's all day. Or maybe they are further increasing their wealth by being paid to visit far away places to give a brief speech on how to further your wealth.

After all, if their investment were so bad, no one would be reading their site.

2.7% profit on turnover up from 1.1%?

I'm amazed that they even felt the need to point out the Harry Potter sales. They (and many other retailers) sold the book well below wholesale price, so would have been lucky to break even on that one, relying on purchasers to either a) come back again for other purchases, b) buy something else along with it.

In layman's (layperson?) terms, they sold it for less money than they bought it - let's see that reflected well on a profit and loss.

Profits of "$78m, a 257 per cent leap from the same quarter last year" on sales of $2,880m? That's not even 4% of revenues! In the days where investors are expecting returns of around 15% on *investment* it's particularly uninspiring. But keeping the Amazon myth going isn't just good for the stock market and particularly those selling the stock but also for financial journalists pushing the bubble.

Amazon is a crap business model with a lot of customers who like the convenience but not that much they will pay a premium for the service.

I work in retail and can easily see the business model that Amazon implement. They buy things in the thousands and by doing so, they negotiate a better buying price. Then they stick on 2 or 3 per cent profit or whatever they need to be competatively priced and bung it on the website. They have very little staff overheads for a company of that size.

Charlie reckons $78m isn't enough profit... please name me a company that doesn't want to make $78m profit? In this day and age with the number of companies that sell on the internet (or even in shops or call centres) the competition is huge. This drives the margins down but you hope the sales brought in from driving down your prices to compete will bring in more business. If you were an investor in Amazon owning just 10% $7.8m is yours. Whats not to like?

The point is its a really bad rate of return on investment - they have always been a company with absoloutly crap return for money. 15% is whats expected, and i would be suprised if investors will want to keep money in a company with 4% returns. Whats the reasoning behind that? Owning 10% stock won't make a difference - yes, $7.8million is a lot, but no, its still not impressive.