Tag Archives: technology
Amazon’s Push Into Business E-Commerce An $18 Billion Opportunity?
Amazon ( AMZN ) is pushing deeper into business-to-business e-commerce, which one analyst estimates could add $18 billion in company revenue by 2020. The B2B unit, Amazon Business , began as Amazon Supply in 2012. The initiative was rebranded in April 2015 and Amazon — which posted 2015 revenue of $107 billion — recently indicated it reached more than $1 billion in annual sales, with 300,000 customers. Bank of America Merrill Lynch analyst Justin Post estimates Amazon Business will reach gross merchandise volume of $3.5 billion this year, resulting in revenue of $3 billion. He anticipates GMV of $8 billion next year and revenue of $6.4 billion. By 2020, estimates Post, Amazon will hit GMV of $25 billion and $18.6 billion in revenue. “Based on recent management comments, Amazon Business appears to be ready for prime time, and we wouldn’t be surprised if Amazon invests in marketing to raise awareness as Amazon’s procurement systems improve,” said Post in a research note. According to market research firm Frost & Sullivan, the U.S. B2B market is expected to reach $1 trillion in sales by 2020, and $6.7 trillion globally. “We think B2B provides significant runway for growth, which could help Amazon sustain its growth rates and premium valuation for many years,” wrote Post. He has a buy rating on Amazon stock, and a price target of 840. Amazon stock was near 705, up more than 1%, in afternoon trading in the stock market today , after touching a record high above 722 on May 12. It’s an IBD Leaderboard stock. Amazon Business sells a broad line of goods, such as office supplies, tools, industrial equipment, tractor equipment and office products. Competitors in the B2B e-commerce sector include Staples ( SPLS ), HD Supply Holdings ( HDS ), Office Depot ( ODP ), Grainger ( GWW ) and Fastenal ( FAST ).
Western Digital Gets Upgrade, As New Era With SanDisk Begins
Western Digital ( WDC ) on Tuesday received a price-target hike to 50 from 45 and an upgrade to outperform from market perform by Cowen analyst Karl Ackerman. The moves comes two days before Western Digital is slated to give new guidance that will include its $16 billion acquisition of SanDisk. Western Digital announced the completion of its SanDisk acquisition last week, creating a big competitor in both disk drives and flash-chip storage. The company has said it would update its guidance after the market close Thursday for its fiscal fourth quarter ending July 1. Ackerman says while he expects the SanDisk acquisition to dilute earnings through 2017, “We think the stock should start to work higher from here, as Western Digital’s updated guidance should act as a positive catalyst and help eliminate uncertainty.” Western Digital stock was above 42, up more than 4%, in afternoon trading in the stock market today . However, the stock is down 47% since the acquisition was announced in October. Shares hit a four-year low of 34.99 on May 16 but are up 20% since then. Western Digital and SanDisk had combined revenue of about $20 billion in 2015, with $14.5 billion from Western Digital. It’s the largest provider of disk drives, ahead of Seagate Technology ( STX ). SanDisk is a leading provider of chips used for data storage in a wide variety of devices, including smartphones, tablets and PCs. The deal will help SanDisk, which has a strong retail business, move up the ladder to make bigger sales to businesses and other enterprise customers — the market where Western Digital is strongest. Western Digital gets the ability to offer chip-based storage in areas where its disk drive technology is losing ground. Western Digital’s year-over-year revenue has fallen for six straight quarters. That’s largely due to lower disk drive sales in the slumping PC market and the migration of disk storage to chip-based storage in many products. Seagate’s revenue has fallen for five straight quarters. “Now that SanDisk is subsumed into Western Digital’s operations, Western Digital now morphs from an enterprise highly exposed to the cannibalization of next-generation storage into a media agnostic, vertically integrated data storage provider capable of generating mid-single-digit revenue growth and low-double-digit EPS growth,” Ackerman wrote. He said the top 10 customers shared between Western Digital and SanDisk include Best Buy ( BBY ), Apple ( AAPL ), Hewlett Packard Enterprise ( HPE ) and HP Inc. ( HPQ ) “With SandDisk, Western Digital can now more effectively service both enterprise and hyper-scale customers and capitalize on the explosion of data creation that should double every two to three years by 2020,” Ackerman wrote.