Amazon.com, Inc. (NASDAQ:AMZN), finally heeding calls to be more transparent during its quarterly reports, has just released numbers for Amazon Web Services (AWS) and according to this expert, the business is “interesting”.
Daniel Ernst of Welch Capital Partners, in a discussion on CNBC’s Earnings Central on Squawk Box with Andrew Ross Sorkin, Rebecca Quick and Joe Kernen, also hinted that the numbers out of Amazon.com, Inc. (NASDAQ:AMZN)’s AWS were a pleasant surprise out of the Internet giant.
“This is the first time we got the numbers. Its trailing twelve [months] was $5.2 billion. The operating margin is 16% which was I would have thought -4% out of AWS given how price competitive they have been so I don’t know exactly who is bigger [among AWS, IBM’s cloud or Microsoft’s Azure] but AWS is large. It grew 48% year-over-year. The operating margin was much stronger than I thought so it’s interesting,” Erns tells Sorkin, Quick and Kernen.
Nonetheless, the expert stressed to the CNBC anchors that AWS is only 3% of the whole Amazon.com, Inc. (NASDAQ:AMZN) business which puts its size into perspective.
Quick says that they are asking Ernst whether he thinks AWS is big compared to other cloud business because Satya Nadella, Microsoft Corporation (NASDAQ:MSFT) CEO, said that the companies he considers being the biggest in the cloud space are his own company, Google Inc (NASDAQ:GOOGL) and Hewlett-Packard Company (NYSE:HPQ). Nadella did not even mention International Business Machines Corp. (NYSE:IBM), Quick notes, when IBM has said that their number for the cloud side of their business adds up to about $7 billion.
Ernst says, however, that these numbers may not be totally comparable because there is the question whether IBM’s cloud number is that large only because it has classified certain parts of its business as “cloud”. With Amazon.com, Inc. (NASDAQ:AMZN), AWS is cloud, he says. AWS is a cloud product that other companies like Netflix, Inc. (NASDAQ:NFLX) use, he adds.
AWS is a well-run business, Ernst says.
David Gallo’s Valinor Management LLC owned 268,130 Amazon.com, Inc. (NASDAQ:AMZN) shares by the end of 2014.
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