Amazon earnings preview: Investors eye cloud business, revenue, prime subscriptions
Yahoo Finance Live anchors discuss what to expect from Amazon Q4 earnings.
JULIE HYMAN: And I am watching Amazon, which is out Thursday after the close of trading. Obviously, it's hard to pick this week because there are so many different companies that are reporting here. And we're gonna be watching Amazon because we keep talking about how the spending in this country is shifting towards services from goods. Amazon straddles both, of course, because it sells a lot of stuff but it also sells a lot of services, mostly in the form of cloud services.
As we know, it is-- it's dominant in that cloud market. It has the biggest market share of any of the companies that attack the cloud. But as we also know, enterprise spending has been waning a little bit. And so we'll see if it is seeing as big growth as it has seen.
If you look at the revenue last quarter, just to-- I feel it's useful sometimes to take a step back and say, OK, where does Amazon get its revenue from? How big exactly is AWS? AWS only actually makes up about 16%-- or did last quarter-- of the company's revenue. But it is very profitable and provides good margins for the company.
The online store is still nearly 50% of the overall company. But then there are third-party seller services, which are now sort of broken out separately from the overall online store. Then you've got add services, and subscription services, and the actual physical stores, i.e. Whole Foods. So it's just interesting here because we'll get sort of in one company, a read on what's happening on these different sides and aspects of the economy.
BRAD SMITH: And you're gonna hear a lot about the pricing strategy from each of these companies that we're talking about, as well, in the future. For pricing for Amazon, that may look different across some of the Prime members that they have. And any time you see a change like, how that could potentially affect membership.
For a company in Ford, we were already getting news this morning, as well, that they're planning to cut their prices by about $600. That's on the Mach-E. And that's hitting back to that EV.
JULIE HYMAN: The electrification.
BRAD SMITH: The electrification of something that was already popular. It was the Mustang Mach-E at first. And now, it's just, I think, the Mach-E. And so with all of the different changes, pricing related, or even at Facebook, some of the input costs that they do have that ultimately change the prices for how advertisers-- and especially given the fact that advertisers are less willing to spend as many dollars perhaps on a Facebook, given that they're monitoring their own spends. All of these things kind of connect together and give you a sense of how each company is kind of pulling pricing levers in a different way because of the demand environment right now.
BRIAN SOZZI: Yeah, I think just going back into Amazon retail, I think, we learned from that Hasbro warning last week, this was a very disappointing holiday season for a lot of retailers. That Amazon retail business likely under pressure.
Which raises the question, has big tech cut expenses fast enough? I know we've been covering all these layoffs, thousands of layoffs, over the past two months or so. But is it deep enough? Is this the sign-- is this just a sampling of what could be to come, as a lot of these companies battle just accelerating slowdowns in their sales and they have to meet these estimates on Wall Street?
JULIE HYMAN: Yeah, a lot to consider. It's gonna be a busy week for us.