Invest for the long term and gain market share early
One company I like to keep my eye on and study what they do straegically is Amazon (the online retailer). Latest news out today is that:
“Oct. 26 (Bloomberg) — Amazon.com Inc.’s escalating pursuit of Apple Inc. squeezed its profit forecast for this quarter, prompting investors to erase as much as $20 billion from the company’s market value in late trading.
Amazon’s operations could lose $200 million in the fourth quarter as costs mount, the Seattle-based company said yesterday. Last quarter’s profit also disappointed analysts, missing estimates by 42 percent — the biggest negative surprise of any technology business in the Standard & Poor’s 500 Index.”
Investing For The Future
What Amazon have done is invest heavily in their main infrastructure and are also going head t head with Apple by bringing out there new Kindle Fire tablet computer. Amazon realise that the future of reading books via your tablet and streaming movies to a mobile device is the future and are prepared to put their money where the mouth is by backing this project to the hilt. This is a brilliant strategic move for the company, but not so good for investors in the short term, hence the title.
Wall Street Are Downgrading Amazon Stock
Many on Wall Street are downgrading the stock and selling up since the company ha had profit squeezed. However, what they fail to recognise is the strategy at play here. Amazon want to gain market share is extremely lucrative market early on, and with their powerful back-end service of product delivery, distribution and digital services, sets this up to be the play of the decade.
What Can We Learn?
As a small business owner it’s worth investing in the latest technology or even new equipment if it meets your long term objectives. If it will improve productivity or make your systems more efficient it’s always advisable to invest now for the future
