Amazon Equity Investment and Acquisitions (Research Paper Sample)

Amazon.com Inc. Equity Investment and Acquisitions
Amazon.com Inc. is an online platform where a range or wide variety of products are offered or sold to consumers. In 2011 the World`s largest online goods seller make a mark of $48 in excess sales. Amazon has been in an increasing mind set going from an e- commerce business to a direct customer fulfillment prospects. It is making investments and acquiring companies and is known as prospective game changer.
Zappos which was a top online spreader of footwear being caught up as purchased by Amazon in July 2009 by paying $1.23bn which was the Amazon major investment of all.
In March 2012 Amazon acquired Kiva Systems for its acquisition strategy for the amount of $775m in the form of cash turned out be the second largest deal for Amazon.
The international investment was made out in Europe for a Lovefilm International Limited which rents out films online and the deal was completed in 2011 by further purchasing investment and at that time company`s value amounted to $320m.
In terms of its growth strategies when Amazon acquires Kiva Systems there were lot of debate in its surrounding for its move to purchase a company who is loss making and traditional also but the thing is that Amazon is fond of customers whether it is in terms of price, product or shipping. Because of Amazons changing way it was more important make large investment in infrastructure to which Kiva who was cost effective and was supportive in supply chain as well.
Zappos supported the operations of Kiva by commissioning Kiva robots on a huge scale basis which not only made an evidence of thought for Amazon.com but also in turn resulting in a good investment.
Assessments of Acquisitions
The Kiva systems was a loss making company and the analyst argued that Amazon is paying more for it when it acquired and after some period Amazon operating margin was 1.17% but the shareholders were enjoying because of higher return on equity provided by Amazon. With Kiva acquisition Amazon was influenced because of its multi-billion dollar investment in program related to construction and that caused Amazon to build smaller warehouses in US. The Kiva acquisition provided Amazon a major change in its investment structures.
The Zappos investment provided a large support to the Amazon as its idea to acquire was evident by Zappos when it provide large number of robots to employ.
CITATION Ver12 \l 1033 (Vermilya, 2012)
There is ongoing and continuous investment strategy for Amazon in its progressive research division Lab 126 which is in technology related such as mobile devices and kindles advancement. This has been a clear strategy for Amazon and it also investing major amount in its infrastructure but there is a thing that profit is not relatively being achieved by Amazon because its main motive is to create huge investment to make its sales base even huge.
CITATION And13 \l 1033 (Anders, 2013)
Effect of Equity Investment
The investment value can be sometimes higher or lower for any of the investor organization in their portfolio of investment like Amazon.com Inc. also faced the difference in value for their investment likewise if the purchased investment amount carrying value is lower than market value it is one of the impairment indicators.
In March 2009 the equity investment that amounted to $248m were lowered down to $89m clearly showing the devaluation in investment and indicating the arrival of impairment.
The recent acquisitions, fluctuation in sales, operating results are part of the analysis for the review of the impairment indicator policies of Amazon.
For Example: Amazon was a having an investment in company named Bill Me Later Inc. in which eBay Inc. with the amount of $945m to purchase that company and because of which decline in value was certain for amazon in its equity stake in the company which now owned by eBay Inc.
The startup investment for any companies doesn’t mean to be that it will cause devaluation but there were some companies in which Amazon stake proves to be better for them such as Yieldex Inc. raised an $8.5million series B round, Elasta Corp. also provided $12million.
CITATION Tom09 \l 1033 (Geron, 2009)
European Market
The investment for Amazon not only in Europe but elsewhere is causing them advantage through the third party selling products on their platform which can have an argument that because of that approach amazon is having just a piece of each sale compared to whole price of product which as discussed above that Amazon sales has been increasing but the profits are not due to the lower % of sales from the original sales of third parties on their platform.
Amazon is currently on a way to employ the people to increase its employee base as for example currently Amazon employed 6000 employees in European Union increasing the number of employees to 32000. The...