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CNBC: Amazon Erases $17.5 Billion From 8 Companies in Day

CNBC: Amazon Erases $17.5 Billion From 8 Companies in Day

By    |   Friday, 29 June 2018 07:44 AM

Two strategic moves by online titan Amazon.com Inc. reportedly wiped out $17.5 billion from eight companies' market values.

The e-commerce giant first said it is seeking to assist hundreds of new small businesses to employ tens of thousands of delivery drivers across the U.S. by providing discounted vehicles, fuel, insurance, uniforms and access to “sophisticated delivery technology,” the Seattle-based company said in a statement Thursday. Startup costs can be as low as $10,000, Amazon said, with an entrepreneur running 40 trucks making $300,000 a year.

That tactic could divert business from carriers FedEx (FDX) and UPS (UPS). Together, the two companies lost nearly $3 billion in market value on Thursday, with UPS bearing the greatest losses, CNBC reported.

Amazon a short time later then said it would buy online pharmacy PillPack, a small but significant step into the U.S. healthcare sector, sending shares of drug distributors and retailers lower.

Sources told CNBC that Amazon paid roughly $1 billion for the company. News of the deal erased about $14.5 billion from drugstores Walgreens Boots Alliance (WBA), CVS Health (CVS) and Rite Aid (RAD) and drug distributors Cardinal Health (CAH), AmerisourceBergen (ABC) and McKesson (MCK).

Walmart (WMT), which sources said bid on PillPack for less than $1 billion, lost $3.04 billion in market capitalization on Thursday.

Meanwhile, while Amazon has long relied on mainstream delivery services, it has also sought more control over the logistics of package delivery, using its own technology and data-crunching abilities, as well as facilities and transport, to move packages more efficiently, Bloomberg reported.

“Customer demand is higher than ever and we have a need to build more capacity,” Dave Clark, Amazon’s senior vice president of worldwide operations, said in the statement. “We are going to empower new, small businesses to form in order to take advantage of the growing opportunity in e-commerce package delivery.”

UPS told Bloomberg by email that it’s “confident in its strategies and believes there is tremendous opportunity” in consumer deliveries, though declined to comment on how Amazon’s move might affect its business. FedEx didn’t immediately respond to a request for comment.

Turning to the online pharmacy deal, the U.S. market for prescription medicine is vast. In 2016, U.S. consumers spent $328.6 billion on retail prescription drugs, according to U.S. government data. CVS had prescription sales of $59.5 billion last year, while Walgreens sold $57.8 billion worth of drugs in its fiscal 2017, Bloomberg reported.

Amazon Chief Executive Officer Jeff Bezos, after building his brainchild into the world’s biggest online retailer, has been using in-house engineering and acquisitions to infiltrate a growing number of businesses. 

Bezos already has signaled his frustration with a health-care system characterized by rising costs for consumers and companies, sometimes-poor outcomes, and unnecessary complexity.

Earlier this year, he and fellow CEOs Warren Buffett and Jamie Dimon of Berkshire Hathaway Inc. and JPMorgan Chase & Co., respectively, agreed to form a new venture to reshape how the companies handle worker health benefits. The entity recently hired celebrated surgeon and health journalist Atul Gawande to steer the effort.

Amazon's (AMZN) stock price rose more than 2 percent.

(Newsmax wire services contributed to this report).

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Two strategic moves by online titan Amazon.com Inc. reportedly wiped out $17.5 billion from eight companies' market values.
amazon, eight, companies, billion, market, cap
Friday, 29 June 2018 07:44 AM
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