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CNBC Silicon Valley Bureau Chief
We've seen these tales of two companies before: one competitor begins pulling away from another, and like a raging brush fire, generates its own momentum, makes its own wind, and just keeps growing. And growing. Devouring everything in its path.
That's not to say the firefighters aren't making progress. It's just that you look at the size of the thing and you think, how in the world are we going to attack that?
That might be the very question eBay is asking of Amazon, and Yahoo [YHOO
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] continues to ponder about Google [GOOG
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]. Here we are two trading days after Amazon reported an astonishing quarter, and the shares rose 20 percent on the news, and they continue to climb. And they should. Amazon is finally, consistently delivering on its promise to become the net's top retailing destination. And the money is pouring in.
Amazon [AMZN
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] has had its issues in the past: razor thin margins, retailing hiccups, drifting with the economy. But the value proposition this company offers consumers and its shareholders is finally being absorbed by Wall Street; and its closest rival, eBay, is like a wide swath of tinder try eucalyptus trees right in the path of these coming flames.
Ebay's [EBAY
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] report just one day before Amazon's was, by comparison, dismal. Not necessarily dire since the holiday shopping quarter can offer even the most unlikely retailers surprising tailwinds. But amidst a sweeping turnaround strategy at eBay, on both technology and procedures, Amazon continues to soar.
Amazon blew past expectations, beating topline by $400 million, and pro forma income by $70 million. And yet its mid-point operating income guidance of $463 million versus Street expectations of $473 million in the fourth quarter seems Apple-esque in its sandbagging-ness.
There's no question there's competition out there. eBay is still out there. Wal-Mart [WMT
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] is still out there. Sony [SNE
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] is still out there even though the Kindle was Amazon's top-selling item, period. And I'm sure at some point we'll start to see valuation downgrades. But a downgrade on valuation would miss the point as to just how compelling the Amazon story has become.
We're witnessing a company not merely establishing itself as the marketplace leader, but pulling away from any meaningful competitor. We saw it with Google, able to eclipse — and easily —Yahoo's dominance, and then able to laugh at any other company trying to step up and take it on (Microsoft [MSFT
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]? Yahoo? A combined Microsoft/Yahoo? AOL? Scrap-feeders all of them.)
Same with Amazon. And eBay. Amazon isn't just the king of the hill. It IS the hill, and nobody seems able to climb it.
Questions? Comments?
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