Thursday, October 25, 2012

Amazon


Amazon is buying Texas Instruments’ chip division. With Amazon’s recent foray into the device field with the Kindle, the ability to more closely control its suppliers is crucial. Now they own their chip supplier. They’re following the Apple model, which should result in a more integrated supply chain, faster time to market and more obfuscated product development to competitors. All good things.
Amazon is also providing commercial lending to small businesses. Some may lament Amazon departing from its core competency to dabble in finance, but the positives far outweigh the negatives. Amazon already has vast knowledge of these small businesses since they sell their products through Amazon’s platform. Additionally, Amazon has a built in way of recouping their loans, much akin to garnishing of workers’ wages. As long as they have the free cash flow, this move should further add to Amazon’s profitability.

Amazon is adding 50,000 retail jobs for the holiday season. This speaks to the volumes of merchandise they expect to move. They also plan to retain thousands of these workers in full-time positions after the holiday season has ended. It’s not public which types of jobs will become the permanent jobs, but the fact that Amazon needs additional labor and feels comfortable retaining some of that labor permanently speaks to their burgeoning business. 

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