Wednesday, October 9, 2019
U.S. firms with Sales in China through 2018.

Wednesday, October 9, 2019
Tracking  Pension Data in Calcbench

Friday, October 4, 2019
In Depth: Leasing Costs in Retail Sector

Thursday, September 19, 2019
Alibaba and Cloud Computing

Monday, September 16, 2019
Introducing Critical Audit Matters

Wednesday, September 11, 2019
Our Fireside Chat on Goodwill Assets

Friday, September 6, 2019
Pulling Forward Share Buybacks

Saturday, August 31, 2019
A Quick Catch-Up on VMWare

Friday, August 23, 2019
By the Numbers: Restructuring Costs Over Time

Wednesday, August 21, 2019
WeWork Liabilities, Part II

Tuesday, August 20, 2019
WeWork’s Liabilities in Perspective

Wednesday, August 14, 2019
Comparing LinkedIn, Twitter Revenue

Wednesday, August 7, 2019
Leasing’s Effect on Retail Balance Sheets

Thursday, August 1, 2019
Using Calcbench to Find China Exposure

Tuesday, July 30, 2019
Leasing Details: The Comcast Example

Monday, July 29, 2019
Easy Fundamental Equity Analysis in Python

Monday, July 22, 2019
Calcbench Data and Tax Reform Insight

Wednesday, July 17, 2019
Downshifting in the Trucking World

Tuesday, July 16, 2019
New Report: Adoption of New Lease Accounting Standard

Friday, July 5, 2019
More Consequences of Lease Accounting

Archive  |  Search:
Amazon’s 10-K and Speculation on HQ2
Saturday, February 3, 2018

So there we were, like any other hip financial data geeks, playing the great business parlor game of 2018: Where will Amazon place its second headquarters?

We were arguing over Boston vs. Northern Virginia, when someone here said, “Why does Amazon even want a second headquarters, anyway? Like, that’s the sort of thing you do when you want to break up a company.”

Yeah. We couldn’t un-see the idea once it entered our heads, either.

To be clear, this is speculation on our part. But we did wonder what Amazon’s segment disclosures might suggest about whether Amazon could be broken up. So we dropped by the trusty Calcbench Interactive Disclosure page to research Amazon’s 2017 Form 10-K, which was filed Feb. 1.

There, at the bottom, in the “Segment Information” section, was this nifty table.

As you can see, AWS (Amazon Web Services, the company’s web hosting business) makes a lot of profit for the firm. The profit margin on that segment is 24.8 percent — miles better than the North America online sales segment, with its 2.7 percent margin, or the international online sales segment, which ran a 5.6 percent loss. And AWS has been running a profit margin of 19 to 25 percent for the last three years, while North America has floated around 2 percent and international hasn’t turned a dime of profit.

Hmmm. From a financial engineering perspective, perhaps you could make the argument that Amazon should spin off AWS into its own business, rather than have that all that growth (revenue up 221 percent in three years! profit up 287 percent!) buried under the slow-poke margins of the retail division.

But that doesn’t tell us much about where Amazon might put its HQ2. Does the AWS division have a concentration of real estate anywhere? Is it growing so rapidly that maybe a large headquarters for AWS makes sense?

So we scrolled further down to Amazon’s segment disclosure of Property, Plant & Equipment. We see this:

AWS accounts for roughly 30.5 percent of total PPE at Amazon, and has nearly doubled in three years. Then again, PPE for North America and international divisions has grown even faster, and wherever HQ2 lands, its PPE will probably be reported in that “Corporate” line at the bottom of the chart anyway.

Really, then, PPE numbers don’t give us much insight. Fully half of AWS’ costs for PPE in 2017 were equipment leases anyway (you can see that in the footnotes) rather than permanent land or equipment acquisitions. That leaves us still speculating about HQ2 based on other factors, such as access to skilled labor or secret plans CEO Jeff Bezos might have to build a flying car factory or something.

Regardless, our Interactive Disclosure page (and don’t forget the Segments, Rollforwards, and Breakouts page either) shows yet again that you can dive deeply into a company’s financial data, and find great insights immediately.

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