business news in context, analysis with attitude

Excellent piece on the New York Times blog, looking at two different ways of evaluating Amazon's current situation.

One interpretation of Amazon's status, framed by the losses it has been suffering, is that, "for all its heft, (it) is starting to lose momentum. It was rejected by some customers who were put off by its acrimonious dispute with the publisher Hachette over e-books, while others found its prices less compelling than they once were.

"But few things about the retailer are ever clear-cut, so here is another interpretation: Amazon is intentionally cannibalizing some major product lines — offering free or nearly free music, video and e-books — to draw tens of millions of people into its ecosystem.

"Far from being weak, Amazon in this view is so strong that it is disrupting not only other retailers but also itself, knowingly and eagerly, as it seeks to leverage its powerful e-commerce operation to become a retail and entertainment colossus. It wants to sell devices, entertainment and services as well as basics like milk and toilet paper."

It is all a matter of interpretation, and you can read the entire story here.

One quick note … it is worth mentioning that CNBC is reporting that Moody's Investors Service "cut its outlook on from 'stable' to 'negative' on Monday, prompted by the online retailer's announcement that it was issuing new debt … The size of Amazon's new senior unsecured notes is yet to be determined, said Moody's Vice President Charlie O'Shea in a release. It is the agency's expectation that the funds will be used for corporate purposes that will support growth initiatives, rather than for shareholder returns."
KC's View: