Amazon reports profit plummeting, stocks hit record high

Bizarro world in Wall Street.

Wall Street really is bizarro-land. Yesterday afternoon, Amazon reported that growth in revenue and earnings per share for the fourth quarter of 2012 was below expectations ($21.27bn and $0.21 respectively), and that profit actually fell year-on-year for the same period (down to $97m). In addition, the company gave weaker-than-expected sales guidance for the first quarter of 2013, estimating $15-16.6bn versus expectations of $16.9bn.

In response to the news, shares jumped 11 per cent in after-hours trading, to an all-time high for the company. (The increase has settled down since to just 8.5 per cent.)

Matt Yglesias gives the best response:

Amazon, as best I can tell, is a charitable organization being run by elements of the investment community for the benefit of consumers… Amazon sells things to people at prices that seem impossible because it actually is impossible to make money that way.

As I wrote last week, it's this side of Amazon, far more than its UK tax avoidance, which is ultimately responsible for the demise of HMV. The company apparently has the most trusting, long-termist investors in the world, who are prepared to wait through quarter after quarter of negligible growth — and outright loss — to reach the mythical period when the company will become profitable.

Some of the news in Amazon's earnings call does imply that that period might be getting closer. The company announced that ebook sales was a "multi-billion dollar" category, and grew by 70 per cent in the last year, compared to just 5 per cent growth for physical book sales. With Amazon aggressively fighting to cut out middlemen from ebooks, and the naturally low marginal cost of selling them, the potential for a higher profit margin is there. But the company, for the moment, is responding by cutting prices (even down to zero), not increasing its margin.

And ultimately, even if investors do think that profitability for Amazon will come in their lifetime, they have to take it on trust, because the company also shows no hint of changing its pattern of being one of the most opaque in the business (even Apple releases more hard numbers than Amazon). There are no numbers at all for Kindle sales, more are there absolute figures for ebook sales.

One day, Amazon may succeed in out-competing every other retailer, and gaining monopoly profits. But there's no hint here that that day is nearing.

Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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Theresa May's offer to EU citizens leaves the 3 million with unanswered questions

So many EU citizens, so little time.

Ahead of the Brexit negotiations with the 27 remaining EU countries, the UK government has just published its pledges to EU citizens living in the UK, listing the rights it will guarantee them after Brexit and how it will guarantee them. The headline: all 3 million of the country’s EU citizens will have to apply to a special “settled status” ID card to remain in the UK after it exist the European Union.

After having spent a year in limbo, and in various occasions having been treated by the same UK government as bargaining chips, this offer will leave many EU citizens living in the UK (this journalist included) with more questions than answers.

Indisputably, this is a step forward. But in June 2017 – more than a year since the EU referendum – it is all too little, too late. 

“EU citizens are valued members of their communities here, and we know that UK nationals abroad are viewed in the same way by their host countries.”

These are words the UK’s EU citizens needed to hear a year ago, when they woke up in a country that had just voted Leave, after a referendum campaign that every week felt more focused on immigration.

“EU citizens who came to the UK before the EU Referendum, and before the formal Article 50 process for exiting the EU was triggered, came on the basis that they would be able to settle permanently, if they were able to build a life here. We recognise the need to honour that expectation.”

A year later, after the UK’s Europeans have experienced rising abuse and hate crime, many have left as a result and the ones who chose to stay and apply for permanent residency have seen their applications returned with a letter asking them to “prepare to leave the country”, these words seem dubious at best.

To any EU citizen whose life has been suspended for the past year, this is the very least the British government could offer. It would have sounded a much more sincere offer a year ago.

And it almost happened then: an editorial in the Evening Standard reported last week that Theresa May, then David Cameron’s home secretary, was the reason it didn’t. “Last June, in the days immediately after the referendum, David Cameron wanted to reassure EU citizens they would be allowed to stay,” the editorial reads. “All his Cabinet agreed with that unilateral offer, except his Home Secretary, Mrs May, who insisted on blocking it.” 

"They will need to apply to the Home Office for permission to stay, which will be evidenced through a residence document. This will be a legal requirement but there is also an important practical reason for this. The residence document will enable EU citizens (and their families) living in the UK to demonstrate to third parties (such as employers or providers of public services) that they have permission to continue to live and work legally in the UK."

The government’s offer lacks details in the measures it introduces – namely, how it will implement the registration and allocation of a special ID card for 3 million individuals. This “residence document” will be “a legal requirement” and will “demonstrate to third parties” that EU citizens have “permission to continue to live and work legally in the UK.” It will grant individuals ““settled status” in UK law (indefinite leave to remain pursuant to the Immigration Act 1971)”.

The government has no reliable figure for the EU citizens living in the UK (3 million is an estimation). Even “modernised and kept as smooth as possible”, the administrative procedure may take a while. The Migration Observatory puts the figure at 140 years assuming current procedures are followed; let’s be optimistic and divide by 10, thanks to modernisation. That’s still 14 years, which is an awful lot.

To qualify to receive the settled status, an individual must have been resident in the UK for five years before a specified (although unspecified by the government at this time) date. Those who have not been a continuous UK resident for that long will have to apply for temporary status until they have reached the five years figure, to become eligible to apply for settled status.

That’s an application to be temporarily eligible to apply to be allowed to stay in the UK. Both applications for which the lengths of procedure remain unknown.

Will EU citizens awaiting for their temporary status be able to leave the country before they are registered? Before they have been here five years? How individuals will prove their continuous employment or housing is undisclosed – what about people working freelance? Lodgers? Will proof of housing or employment be enough, or will both be needed?

Among the many other practicalities the government’s offer does not detail is the cost of such a scheme, although it promises to “set fees at a reasonable level” – which means it will definitely not be free to be an EU citizen in the UK (before Brexit, it definitely was.)

And the new ID will replace any previous status held by EU citizens, which means even holders of permanent citizenship will have to reapply.

Remember that 140 years figure? Doesn’t sound so crazy now, does it?

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