Business: When Jeff Bezos Talks Long Term, He Really Means It

By Dennis Kuba
December 20, 2011

In 1997 when Amazon went public, Jeff Bezos, Amazon’s CEO warned investors that they must have a long-term approach. Today, Amazon takes that same long-term approach where they are willing to sacrifice profits to invest in “seeds” like the Kindle Fire and let them grow over five to seven years (or more).
By taking a long-term approach, they can gain economies of scale similar to Wal-Mart and eliminate or weaken competitors like Borders, Barnes & Noble and Best Buy.
“Amazon, in particular, has been true to its word to manage for the long term,” reports The New York Times. “It remains one of the world’s leading growth companies and its stock has soared 12,200 percent since its public offering. In late October it reported quarterly revenue growth of 44 percent to almost $11 billion, which came on the heels of 80 percent growth a year ago.”
Investors tend to be less patient than Bezos, and the company has faced criticism and falling stock value over the years. “The stock has been bumpy,” explains Scott Devitt, a Morgan Stanley analyst. “Investor trust seems to go in cycles.”
Because of this, Amazon may have to “deliver on its promise of higher margins and profits, however long term that may turn out to be,” suggests the article. “To many investors, long term is a year,” Devitt said. “For Bezos, he’s looking at a 10- to 20-year time line. When he says long term, he means 2020 or 2030.”

No Comments Yet