SEATTLE, Fri Apr 27, 2012 – Amazon.com Inc.’s stellar quarterly results are helping convince skeptics on Wall Street that a bout of intense spending is beginning to pay off for an Internet retailer trying to transform itself into a technology company.
Shares in Amazon leapt 15 percent on Friday after it reported first-quarter earnings and margins well above investors’ most bullish expectations, tacking on some $10 billion in market value and marking its biggest single-day gain since October 2009.
CEO Jeff Bezos has tried to convince investors to stick with the company for the long term as it flirted with losses in recent quarters. He is trying to transform Amazon from an online version of a big-box retailer like Wal-Mart into a provider of technology services.
Some investors argue that its valuation of over 70 times forward earnings – dwarfing companies like Apple Inc. and Google Inc. that produce record profits – is justified because Amazon is on track for enormous margin expansion as it expands into more-profitable services from hosting websites in the cloud to providing an online marketplace connecting buyers and sellers.
“These services will become an increasingly important part of Amazon’s overall business and will be a driving force of profitability going forward,” Bernstein Research analyst Carlos Kirjner wrote.
Amazon is trying to be “not a bookseller or a retailer, but a company that uses technology and (now) its scale to transform whole value chains” from retail to publishing and video distribution.
PITTSBURGH ― President Barack Obama will launch an initiative today to develop new manufacturing jobs by teaming government up with companies and universities to invest more than $500 million in advanced technologies.
Obama will visit Carnegie Mellon University in Pittsburgh to launch the Advanced Manufacturing Partnership, which aims to speed development of a new generation of American-made high-technology products.
The White House noted that major new technologies in the past were commercialized into vast industries with the help of government-university-company partnerships, including telephones, jet engines and the Internet.
It hopes for similar achievements by speeding development of new technologies such as next-generation robotics, advanced composite materials, small high-powered batteries and bio-manufacturing.
The program will leverage existing federal funds and future federal departmental budgets to invest with industry some $300 million to jump-start domestic manufacturing capabilities seen as critical to U.S. national security. Initial public-private investment areas include batteries, composites, metal fabrication, biotechnology and alternative energy.
“Today, I’m calling for all of us to come together ― private sector industry, universities, and the government ―to spark a renaissance in American manufacturing and help our manufacturers develop the cutting-edge tools they need to compete with anyone in the world,” Obama said in a statement.
“With these key investments, we can ensure that the United States remains a nation that ‘invents it here and manufactures it here’ and creates high-quality, good paying jobs for American workers,” Obama said.
Obama is rolling out the initiative as the U.S. unemployment rate remains at a stubbornly high 9.1 percent and initial claims for state unemployment benefits are ticking higher after months of decline.