Amazon Company Background 1

Final Project Milestone One:

Amazon Company Background
Pamela Femera
Southern New Hampshire University
ACC 345
May 9, 2019
Amazon Company Background 2

Company Name:

Amazon.com, Inc
NASDAQ: (AMZN)

Purpose of Valuation:

Business valuation is the process of determining the economic value of a business

or company. Business valuation can depend on the values of the assessor, tangible and

intangible assets, and varying economic conditions (Wilkinson, 2016). The purpose of

Amazon’s valuation is to analyze and get a more in-depth understanding of the

company’s assets, liabilities, income recognition, equity, and other significant financial

information about the company. This will help management get a better perspective on

the true value of the company. It is crucial to have a thorough understanding of the

company’s financial information and position in order for management to be able to

make various decisions and projections with regards to the company’s future. This will

allow the company to gain a better understanding of their current position in order to

understand what they are doing good and what they need to change in order to improve

their operations and financial position in the future.

Date of Valuation:

May 9, 2019

Percent Ownership Being Value

On September 4, 2018, Amazon became the second publicly traded company to

be worth $1 trillion (Pisani and Jay, 2018). Amazon has 56.10% institutional ownership.

The total shares outstanding (millions) is 492, the price per share is $1,889.98, and the

total value of holdings (millions) is $522,037 (“Institutional Ownership”). “Amazon.com

Amazon Company Background 3

Inc. AMZN, -0.52% is a perfect example of a company that doesn't need to repurchase its

stock for it to keep rising. The e-commerce giant has had a $5 billion share buyback

program in place since February 2016, but the last time it bought back any stock was the

first quarter of 2012. The stock, which rose 2.4% in afternoon trade after first-quarter

results late Thursday, ran up 18.6% during the first quarter, while the S&P 500 gained

13.1% (“Amazon Extends Streak”).

Financial Statements:

Below is a link providing an overview of the company’s financial statements from 2005-

2019.

https://www.macrotrends.net/stocks/charts/AMZN/amazon/financial-statements

Company History and Business Structure

“Amazon is a Fortune 500 e-commerce company based in Seattle, Wash. It has

the distinction of being one of the first large companies to sell goods over the Internet. In

1994, Jeff Bezos founded Amazon, which launched the following year (Schneider,

2018).” The name Amazon comes from the Amazon River which is the largest river in

the world. Amazon did not go online until the following year in 1995, but the company

unfortunately struggled for several years to make profits. However, Jeff Bezo’s was a

very determined business man who did not give up. The company started out as an online

bookstore, but then began to quickly diversify their offerin other items such as DVDs,

music, video games, electronics, and clothing (Schneider, 2018). Today, amazon has

evolved to this huge internet conglomerate that sells nearly anything online. They have

since acquired approximately 45 companies such as: Whole Foods Market, Bookpages,

Zappos, Mindcorps Incorporated, etc (“List of Mergers”). The company is taping into
Amazon Company Background 4

many different industries. Amazon even created their own product line such as the

Kindle, which allows consumers to download books, newspapers, magazines directly

onto the tablet. “The Company even serves authors and independent publishers with

Kindle Direct Publishing, an online service that lets independent authors and publishers

choose a royalty option and make their books available in the Kindle Store, along with its

own publishing arm, Amazon Publishing. It also offers programs that allow authors,

musicians, filmmakers, application developers and others to publish and sell content

(“Amazon.com, Inc”),”

Description of Facilities, Major assets or equipment key to running the business

Amazon’s first headquarters was located in Seattle, Washington. Since the

company has significantly outperformed what they could have imagined, the need for

more space became evident. The company has since decided to open a second

headquarters and split it amongst two cities. “The world’s largest online retailer sparked a

bidding frenzy in September 2017 when it announced it would invest over $5 billion to

create an “HQ2” in addition to its home base in Seattle and hire up to 50,000 people

(Dastin and Shepardson, 2018). Some of the potential candidates included: Long Island,

New York, Arlington, and Nashville (Dastin and Shepardson, 2018).

Furthermore, Amazon has many different types of assets and equipment that are

critical elements to running their business operations efficiently. The company has both

tangible and intangible assets that have made it one of the strongest competitors in the

industry. The intangible assets include but are not limited to the company’s copyrights,

intellectual property, and trademarks. The company also common tangible assets such as
Amazon Company Background 5

land, buildings, transportation equipment, manufacturing equipment, office equipment,

and office furniture that are used in throughout their operations (“Historical Data”).

Furthermore, another key asset that the company has invested in is robotics. In 2012,

Amazon purchased a company called Kiva for $775 million. “Amazon has long used

automation in its fulfillment centers, and Kiva’s technology is another way to improve

productivity by bringing the products directly to employees to pick, pack and stow (Hall,

2019).” Robotic technologies are a strong asset because it has helped increase efficiency

throughout the chain of operations.

Overview of Management Structure

The management team includes: a CEO and Chairman of the Board of Directors,

Chief Financial Officer, Chief Executive Officer, Senior Vice President, General

Counsel, Senior Vice President of Business Development, Vice President, Worldwide

Controller, CEO of Amazon Web Services, Secretary of Amazon.com., and there are

nine independent directors (“Amazon.com, Inc”).

Jeff Bezos founded Amazon.com is currently the CEO and Chairman of the Board

of Directors. In 2015, Brian Olsavsky became company’s the Chief Financial Officer

(CFO). Jeffery Blackburn, has been the company’s Senior Vice President of Business

Development since 2006. Andrew Jassy has played a key role in the company’s business

operations and has been apart of the management team since 2007. Another important

member of the team is David Zopolsky. David serves as the company’s Senior Vice

President of General Counsel and Secretary of Amazon.com. The company’s nine

independent directors also play a crucial role in the company’s structure in guiding the

company with regards to operations and risk management.

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References:

Dastin, J and Shepardson, D.2018. “Amazon Plans to Split Second Headquarters in

Two Cities”.Retrieved from: https://www.reuters.com/article/us-amazon-
com-headquarters/amazon-plans-to-split-second-headquarters-in-two-
cities-sources-idUSKCN1NA2HM

Hall, B.2019.“Amazon.com to Acquire Manufacturing of Robotics”.Retrieved from:

https://dealbook.nytimes.com/2012/03/19/amazon-com-buys-kiva-systems-for-
775-million/

Pisani, J and Jay M., 2018.“Amazon is 2nd Company to Reach $1 Trillion Market
Value”.Retrieved from:
https://www.bostonglobe.com/business/2018/09/04/amazon-becomes-
second-publicly-traded-company-reach-trillion-market-
value/5k63rOkcYvrc9geYrhpyWK/story.html

Schneider, L.2018.“Overview of Amazon.coms History and Workplace

Culture.”Retrieved from: https://www.thebalancecareers.com/amazon-com-
company-research-2071316

Wilkinson, J.2016. “Business Valuation Purposes”.Retrieved

from:https://strategiccfo.com/business-valuation-purposes/

“Amazon Extends Streak of Not Buying Back Stock for 7 Years”.Retrieved from:
https://www.marketwatch.com/story/amazon-extends-
streak-of-not-buying-back-stock-to-7-years-2019-04-26

“Amazon.com, Inc”.Retrieved from:

https://www.reuters.com/finance/stocks/company-profile/AMZN.O

“Amazon Financial Statements 2005-2019”.Retrieved from:

https://www.macrotrends.net/stocks/charts/AMZN/amazon/financial-
statements

“Institutional Ownership”.Retrieved from:

https://www.nasdaq.com/symbol/amzn/ownership-summary

“List of Mergers and Acquisitions by Amazon”.Retrieved from:

https://en.wikipedia.org/wiki/List_of_mergers_and_acquisitions_by_Amazon

“Historical Data”.Retrieved from:

https://www.gurufocus.com/term/Net+PPE/AMZN/Property,-Plant-and-
Equipment/Amazon.com%20Inc
Amazon Company Background 7