by winston » Fri Oct 02, 2015 6:51 pm
not vested
Companies That Should Split: Amazon (AMZN)
Amazon.com’s (AMZN) cloud business, Amazon Web Services, is a bright star for its business, and far more valuable than most realize.
AWS is AMZN’s cloud infrastructure services business, controlling a 30% market share in an industry with 50% annual growth.
Looking ahead, analysts expect AWS to reach $10 billion in revenues by next year, and earlier this year, I made a case that Amazon Web Services could be worth $100 billion if spun off by itself due to the growth outlook and AMZN’s leading market share.
If AWS would be worth $100 billion by the time AMZN spun it off, that would leave a valuation under $150 billion for a core e-commerce and media business that should create close to $100 billion in revenue this year.
While that doesn’t make AMZN look particularly cheap, it does make the company look more fairly valued compared to today. By splitting AWS and AMZN’s core businesses, the former would have the opportunity to pursue new growth opportunities and partnerships independent of Amazon, whereas AMZN would be able to focus exclusively on growing its core business without worrying about that small, but very valuable cloud services business.
Long-term, it would appear the best move to drive shareholder value.
Source: Investor Place
It's all about "how much you made when you were right" & "how little you lost when you were wrong"