Amazon's stunning success down to Jeff Bezos willingness to defy Wall Street and take a long term view

Amazon has produced a third consecutive quarter of record earnings. But the company hasn't stopped investing for the future

Amazon's Bezos has succeeded by taking the long term view (Getty)

A minor financial earthquake to end the week: Amazon reported a record profit for the third consecutive quarter.

That’s right, the company that for so long made a virtue of its losses in pursuit of growth, growth and more growth, is now solidly cash generative.

Net income came in at $875m (£665m) for the three months ending June 30, Amazon’s second financial quarter, which was comfortably ahead of the $540m forecast by Wall Street.

Not that growth has been forgotten. Far from it. The company said earnings will likely fall a bit during the current quarter. More investment, you see.

Growth is still CEO and founder Jeff Bezos’ prime, or should that be Prime, focus as demonstrated by the 31 per cent surge in revenues to $30.4bn.

The other notable feature of Amazon’s reports are the sheer number of businesses that are feeding into that vast pool. The list of operating, as opposed to financial, highlights ran to 26 separate entries this time around. I actually had go through them three times to get that number because I kept losing count.

They talked about Amazon’s own retailing, the marketplace it offers to other retailers, its Fire TV service, the activities of its original content producing studios, the services provided to other businesses, cloud computing and data warehousing, the operational “Career Choice” programme that pre-pays 95 per cent of tuition and books for courses that teach in-demand skills.

See, we’re good corporate citizens too!

It’s bears repreating that Mr Bezos started out as a humble bookseller, selling them over the internet from out of his garage in a Seattle suburb. Having mastered the online bookselling business, he expanded Amazon into new areas of retail, which is what many traditional retailers do. They don’t always make it work, but it doesn’t stop them from trying.

Amazon did make it work. But then it exploded into a dizzying array of new business areas.

When big companies become conglomerates like this it mostly falls apart. They end up getting broken up, or they just fall to pieces under their own weight.

Amazon has shown scant sign of that happening.

Compare and contrast it to Apple. As I highlighted earlier this week, the world’s biggest tech company has actually been something of a one trick pony for a long time. Wall Street has only just started to notice that there might be a life beyond the iPhone.

Amazon, however, has more tricks than David Blaine. They’re usually a lot more entertaining. If you don’t believe me you obviously haven’t sampled some of the original offerings from Amazon studios.

Mr Bezos has found it necessary to thumb his nose at Wall Street to get to where he is now but given its recent results, his investors will give him licence to flip the bird to American financial commentators and analysts any time he choses to do so.

He will probably provide ample fodder for MBA students for years to come. But you don’t need to spent a year of your life and a consideration slug of your capital on identifying the secret to Mr Bezos’ success via a thesis.

He invests, and heavily, for the future, sacrificing short term profits for longer term value. He gives his businesses all the love they need to succeed.

There are many things that he does that are quixotic, and that you wouldn’t actually want other chief executives to be doing. There are not many that have the force of personality or the ability to keep so many plates spinning in the air.

Too often when rivals go on acquisition and diversification sprees they backfire badly on shareholders and staff because too many executives lack the capability and competence to succeed with what they buy. Mr Bezos is a notable excepton.

Amazon hasn’t been free of controversy, of course. It offers a service to other retailers, but it has also squeezed too many independens, booksellers in particular but others too, out of existence.

Mr Bezos has also got on to the Forbes list of the world’s ten richest billionaires on the back of workers whose treatment has sometimes been quesionable at bestl. “Wrestling big ideas in a bruising workplace,” is how the New York Times described the corporate culture among white collar staff. According to the report - and there have been others - blue collar staff in Amazon warehouses didn't have it any better. Some of the practices detailed ought to have gone the way of gaslight and transport by carts pulled by horses.

Mr Bezos said he did not recognise the Amazon that was portrayed and urged scarred employees to contact HR, or to e-mail him, if they knew of any incidences of the kind it related.

You don't need to put employees under the lash to build a successful business. The same, or better, results can be achieved with sugar. One would hope that lesson has been taken on board.

But the point about Mr Bezos' long term thinking and its long term view remains. In a financial world obsessed with quarterly numbers, Amazon stands out. Those who invested along with Mr Bezos have reaped handsome rewards. They will continue to do so while this approach continues.

If there is a fly in the ointment it is this: What on earth happens to the company when its mercurial founder finally retires to his books?