Amazon: No Need to Disclose (yet)

Shira Ovide has a terrific article for Bloomberg BusinessWeek titled, "Amazon Takes Secrecy to a Comic Extreme."   She writes,

Companies, of course, would prefer to reveal as little as possible. And then there's Amazon.com Inc., which takes financial disclosure stinginess to the next level. So far, investors have been fine with it. They see one of the world's most ambitious companies and a stock price that has quadrupled since 2012, and happily toss aside their Amazon spreadsheets filled with question marks. But Amazon's thriftiness with financial disclosure could backfire. Secrecy is acceptable when companies are doing well. It becomes suspicious when things go south.

Ovide writes that Amazon provides quarterly earnings projections that are "comically broad."   Ovide explains that the company "loves to show charts without labels" and provide investors and analysts with "reams of fluff."  Bezos, I believe, would rebut Ovide's observations by explaining that Amazon does not manage for quarterly earnings or to meet short-term investor expectations.  He is managing for the long term, and he's putting the customer first.  That's his story, and he's sticking to it.  In fact, he's stuck to it for 22 years, profits be damned.  

Ovide does make an important point though.   This attitude about disclosure works beautifully until a company stumbles.  If and when that happens to Amazon, the willingness to accept very limited disclosure will change.  In fact, it may change quite suddenly if Amazon falters.   For now, though, Amazon gains a key competitive advantage through its limited disclosure policy.   Competitors don't know the types of details that they would love to have access to as they formulate their strategies.  Once again, Bezos has found a way to gain the upper hand.  Some of his key rivals have to play by a different set of rules.  Not only must they turn a sizable profit to please investors, but they must disclose much more information.