Sky-high expectations for release of Amazon Web Services’ numbers, The Edge Group pushes Spinoff
Apr 22, 2015
By Jay Greene, Senior Writer, The Seattle Times: Much of the interest in Amazon’s earning report for the first quarter will focus on financial results of its Amazon Web Services data operation. This will be the first time the company is breaking out AWS numbers publicly. When Amazon.com reports its quarterly financial results Thursday, the company will do something it has never done before: provide detailed financial information about its Amazon Web Services division.
In November, the Financial Times’ Lex column suggested spinning off the division as a way to make Amazon more profitable while garnering a lofty cloud-computing multiple for a separate AWS. A month later, The Edge Consulting Group, a London firm that specializes in spinoffs, suggested an independent AWS could attract a bidding war.
Prying data from Amazon has always been a struggle, and financial information about AWS is among the most prized, yet unavailable, detail for investors. That’s because investors want to know as much as they can about AWS, which rents computing power and storage for businesses and is believed to be one of the fastest-growing pieces in Amazon’s empire.
Amazon is breaking out the AWS financial because federal accounting standards require disclosure of units the size of AWS.
Breaking out that data has revived the question of whether Amazon might spin off AWS. To many, the division doesn’t appear core to Amazon’s giant retail operation. What’s more, the hefty investments building the technical infrastructure behind AWS are a drain on Amazon’s bottom line. And an AWS free of Amazon could open the unit up to capital markets, giving it more financial clout as it competes with Microsoft, Google and other deep-pocketed rivals.