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.

Photo: Getty
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Mark Sampson's exit leaves the FA still trying to convince itself of its own infallibility

Football's governing body won't be able to repair the damage to its reputation in silence.

By the end, it appeared as if Mark Sampson was weathering the storm.

Despite personal reflections that the uproar and scandal that has surrounded his recent tenure as England women's football manger was taking a toll, he seemed, as of Tuesday night, firmly ensconced in the post he had held since 2013.

Player Eniola Aluko’s claims of bullying and racism against the coach – given little backing from teammates and, on balance, disregarded by consecutive enquiries – remained a persistent story, yet talk of a fresh investigation were trumped in importance by Sampson’s continued presence at training and in the dugout.

The BBC’s occasionally rabid attachment to proceedings gave the saga prolonged oxygen, but when Sampson seemed to retain the FA’s support – taking charge of the Lionesses’ 6-0 win over Russia on Tuesday night – the worst appeared to be over.

With hindsight, the vultures were simply sharpening their talons.

Sampson’s sacking – less than 24 hours after that Russia game – came after a report was unearthed detailing a historic complaint against him from his time coaching Bristol Academy – a job he left to take up the England post.

In what has long become customary, the FA received these claims nearly four years ago yet failed to act definitively – initially concluding that their new coach was “not a safeguarding risk”. However as the recent crisis depended, the full details of these initial accusations were allegedly not revealed to senior leadership.

Confirming Sampson's departure on Wednesday, FA chief executive Martin Glenn carried a pained expression reminiscent of former incumbent Mark Palios, who, in another entry in the annals of great FA crises, resigned in 2004 as a result of an affair with FA secretary Faria Alam.

Glenn will hope that his own head is not sought in the weeks ahead as his conduct throughout the Sampson saga is probed.

It also marks yet another turbulent 12 months for the beleaguered governing body, who almost exactly a year ago to the day, parted company with England men’s coach Sam Allardyce after just a single game in charge – the former Bolton and Sunderland coach getting the bullet as a result of transfer advice offered to undercover journalists.

The Allardyce departure was handled with uncharacteristic efficiency – a symptom, perhaps, of the initial scepticism behind his appointment rather than any particular reflection on his crimes.

With clear-eyed judgement, it is difficult not to have a portion of sympathy for Sampson – who, cleared by those investigations, maintained the very visible backing of his squad – right up until Wednesday’s bitter denouement.

That he’s been paid in full for the three-year contract signed last summer speaks for how soft a line the FA took on the events that forced the sacking – hoping, perhaps, for as quiet an ending as possible for both parties.

Regrettably, for the FA at least, considerable damage to their reputation will not be something they can repair in silence – not in an era where women’s football enjoys such a high profile in the national consciousness and the body continues to mark itself an easy target for criticism. 

The exact contents of those 2014 allegations and that report are sure to be known down the line – non-disclosure agreements willing – but are as of now only conjecture and innuendo.

Without details, it’s difficult to know how hard to judge Sampson. The facts of his performance on the pitch mark him out as having been an accomplished coach. That is no longer the exclusive measure of success.

Detractors will murmur darkly about there being no smoke without fire, while his supporters will point to the unique nature of the job and the often confrontational elements of its duties.

Sampson, at 34, is still a relatively young man and may be able to coach again once the rancour has subsided – although with a reputation severely bloodied, will look on the two-year salary windfall with some gratitude.

Despite Glenn’s insistence that his former manager is “clear to work” in the sport, it’s hard to envisage his career ever resuming in the women’s game.

The FA itself is again left rudderless as it tries to convince itself of its own infallibility. Flabby management structures and the perception of being an antiquated country club – valid or not – will be revisited with relish.

Perhaps positively, it could herald a more honest conversation behind what success looks like for the national game as a whole. Inclusiveness and development of a robust culture are often the first words to disappear from the vocabulary once on field results start to falter.  

For once, the identity of the next coach is not the urgent dilemma facing the FA.

You can follow Cameron on Twitter here.