Amazon Earns $201.9 Billion, Mostly Spends It On Computers

SEATTLE—Amazon said Thursday that third-quarter revenue rose 12% to $201.9 billion. Then it explained where the money went. Most of it went into buildings full of computers. The buildings are large. The boxes are unchanged.

According to CNBC, earnings were $1.89 a share, below the $1.96 analysts expected. Amazon Web Services revenue grew 39% to $46 billion. Advertising brought in $19.64 billion, short of the $20.82 billion Wall Street wanted. Capital expenditures were $77.3 billion in the quarter, and the company expects about $220 billion for the year. Free cash flow over the trailing twelve months was negative $42.4 billion. Shares fell about 6% after hours.

I have moved a lot of freight. I have never moved $77.3 billion of anything in 92 days. That is about $840 million a day. A good tractor runs maybe $180,000. I did the math. It is a lot of trucks that are not trucks.

said a fictional pallet of paper towels at a fulfillment center outside Kent, Washington.

Where A Pallet Thinks The Money WentShare of Amazon's capital spending, as estimated by a pallet that was not consulted

Where A Pallet Thinks The Money Went
Computers in very large buildings	61%
Electricity for the computers	17%
Cooling for the electricity	11%
Boxes	7%
A dock door, eventually	4%

Source: The Daily SKU Supply Chain Desk; one fictional pallet of paper towels, 48 rolls, strong opinions

"They used to talk about us in meetings," said a fictional pallet of paper towels at a fulfillment center outside Kent, Washington. "Now they talk about megawatts. I am 48 rolls. I do not draw power. I just sit here, absorbent."

Amazon expects fourth-quarter sales between $240 billion and $247 billion. That is peak season. Peak season does not care about data centers. It cares about the dock door. The dock door has asked for nothing. It would take a new seal.

A fictional server rack in northern Virginia, reached through its cooling vent, said it was grateful for the investment and declined to say what it was computing. "Shopping, mostly," it said. "Somebody's agent wants a speaker cover."

For the record. Container DSKU 401177-3 is on Day 933. Status: in transit. I checked at 5:38 a.m., two minutes earlier than yesterday. Nothing else changed. The container did not get a data center either.

The pallet said it will keep doing its job through the holidays. "Somebody has to be the thing in the box," it said. Fair. Good wrap on that pallet, too. Tight. Honest.

Gus Ternberg covers supply chain and is still tracking Container DSKU 401177-3. Status: in transit. More from Gus Ternberg ›