Why Amazon and others don’t specifically report cloud revenues

Grazed from NetworkWorld. Author: Brandon Butler.

Recent news that the Securities and Exchange Commission is investigating how IBM reports its cloud computing revenues begs the question: Why are companies so coy about reporting their cloud revenues? Basically, the answer is because they can be. Although, the SEC’s most recent probe could change that, for at least some companies.

Perhaps the biggest player in the IaaS market of the cloud, Amazon Web Services, is a good example of the issue. In financial filings, the company reports revenues from its cloud computing division – Amazon Web Services – in a line item lumped in together with two other items, advertising services and credit card agreements. So, it’s difficult to decipher exactly how much revenue is derived from AWS alone…

Ben Schachter, a financial analyst with Macquarie Capital, says as a general rule if a revenue stream does not represent more than 10% of a company’s total earnings, the company does not have to report it explicitly in filings. While Schachter estimates that AWS could generate $3.8 billion in revenues this year, that’s only 6% of Amazon.com’s reported $61 billion in revenue from last year. “Overall, (AWS) is an interesting opportunity and certainly something to pay attention to,” when it comes to Amazon.com as a broader company, Schachter says. “But it doesn’t move the needle much” on the company’s finances…

Read more from the source @ http://www.networkworld.com/news/2013/080713-cloud-revenues-272623.html