Bezos: Forget profits for now; we're still spending

The online giant's chief executive lists more than a dozen areas where the company is pumping its money, suggesting continued pressure on profit margins as it continues to seek new markets.

Amazon's Jeff Bezos at an event launching Kindle electronic readers in Santa Monica, Calif., last September.

SEATTLE -- Since its earliest days, Amazon has put investing in new business ahead of expanding its profit margins, often to shareholder chagrin.

At the company's annual meeting here today, Chief Executive Jeff Bezos repeated the mantra, and listed more than a dozen areas into which the online giant is pumping its resources.

"We are still thinking of this as day one," Bezos said of the company that first sold shares to the public 16 years ago and now has 88,000 employees and 209 million active customers. "In fact, I think the alarm clock is still on and we haven't even hit the snooze button yet."

Bezos reeled off investment after investment to the sparsely attended meeting. He talked about the company's $775 million acquisition of Kiva Systems , which makes robots that help automate its fulfillment centers. Bezos talked about those fulfillment centers themselves, which he said now total 89, up from 39 at the end of 2009.

Bezos mentioned investments in the company's Amazon Prime subscription service that offers rapid shipping as well as streaming movies. The company now offers 40,000 video programs, and is investing in original content , including crowdsourced projects with its audience to get green-lighted for production.

"It's a pretty exciting, innovative approach," Bezos said.

Bezos continued, playing up the company's investments in Amazon Web Services, its growing cloud-services platform. And he talked up the investments in devices such as the Kindle and the money the company is pumping into creating the ecosystem to support its electronic readers.

The one investment Bezos didn't discuss, and wasn't asked about by shareholders, was new hardware devices from the company. Reports have circulated in recent months that Amazon would launch both a mobile phone and a set-top box . Those topics were never mentioned at the meeting.

Bezos faced a few critical questions from shareholders, predominantly regarding the sale of violent movies and video games. He sidestepped a question from a representative of the conservative National Center for Public Policy Research, wondering about Amazon's decision to ban the sale of weapons parts but not the sale of violent games and movies.

But when two other shareholders followed up with questions about violent products, Bezos responded that the company wants to improve its policing of controversial content. But he said it can't come prior to the products, offered by third-party sellers on Amazon.com, hitting the marketplace.

"It needs to be self-service," he said of the marketplace. "If it was gated, that would be throwing the baby out with the bathwater."

Bezos also suggested that parents need to play an active role in preventing their kids from seeing objectionable content, something which Amazon provides tools for in its Kindle. When one of his kids hosted a recent slumber party, Bezos said that he confiscated all of the guests' electronic gadgets before sending them to bed.

"One kid said, 'Can I take my Kindle?'" Bezos recalled.

"I said, 'Is it e-ink or Fire?'" he said, making the distinction between the Kindle that doesn't receive video content and the one that does.

When the kid told him it was an e-ink, Bezos said he let him keep it.

Bezos also got a question about the potential for 3D printing at Amazon, which could one day allow consumers to download files to produce physical products from those printers in their homes. While he professed enthusiasm for the technology, Bezos said he didn't believe it would arrive for consumers "anytime soon."

This year's meeting was a far less raucous affair than the one a year ago. Then, protesters chanted outside the meeting, calling for Amazon to "pay more taxes, treat its workers better, and drop its membership in a conservative public-policy organization," according to a Seattle Times account of the event. Inside, Amazon addressed some of the concerns, with Bezos announcing plans to retrofit warehouses with air conditioning, and general counsel Michelle Wilson noting that Amazon would drop its membership in the American Legislative Exchange Council.

That didn't lead to the issues disappearing altogether, though. In this year's annual meeting, a shareholder activist group called Investor Voice offered a shareholder proposal calling on Amazon to release a semiannual report that discloses its policies and procedures for making political contributions. That proposal lost, garnering 23.6 percent of the shareholder vote.

About the author

Jay Greene, a CNET senior writer, works from Seattle and focuses on investigations and analysis. He's a former Seattle bureau chief for BusinessWeek and author of the book "Design Is How It Works: How the Smartest Companies Turn Products into Icons" (Penguin/Portfolio).

 

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