Amazon.com (NASDAQ:AMZN) stock has been a solid winner in the Prosocial Portfolio I manage for Fool.com, having doubled since I purchased shares three years ago. However, I've finally decided to sell the stock for two reasons: neglect of an important stakeholder group and what I believe are some weaknesses in its strategic armor.
A relatively neglected stakeholder
My philosophy for the Prosocial Portfolio is to seek out stocks of high-quality companies that take care of stakeholders and show socially responsible attributes. Amazon is a remarkable company in many ways, and I do believe that for the most part, it brings a lot of good to the world and to most of its stakeholders.
However, in Amazon's expensive journey to its goal -- which, as many contend, does appear to be complete world domination -- it's failed to invest enough in an essential stakeholder: employees.
The negative buzz surrounding Amazon's warehouse worker treatment has been one black mark in my book since purchase. The risk of being viewed as the e-commerce version of Wal-Mart is no small concern.
Amazon's warehouse workers work hard for the money, and it's not that much. Although Amazon has stressed in the past that its pay is 30% higher than retail employees, in 2013 CNN pointed out that they're paid the industry standard wage level for warehouse workers, so the retail comparison is a little shaky.
These folks walk between seven and 15 miles per day, and given picking quotas, those are by no means walks in the park. Employees' productivity is tracked using handheld devices, so there is a stressful, "watched" element to this labor-intensive job.
Some point out that this is the way that warehouse work is, regardless of one's employer. This Mental Floss piece describes the good, the bad, and the ugly regarding work in Amazon's fulfillment centers, and specifically points out in one bullet that "not everyone has a horror story."
Still, since when has Amazon been interested in "that's just the way it is"? This is a company that convinced people that an online bookstore made sense (yes, boys and girls, there was a time when people didn't believe that), and today, it's working on drones, for goodness' sake.
Granted, Amazon does have a few interesting employee benefits that don't get too much press -- take educational benefits and the interesting Pay to Quit program. However, I have hoped for years that Amazon would up its game in providing a lot more than that. This is a company that's turned many industries on their heads in the competitive sense. It'd be excellent to see the same kind of wild reinvention in the employee culture area -- employees are a great place to invest.
That flop of a phone
After all, we already know that Amazon has no problem throwing money at all kinds of moon shots. Some of them are certainly just as "crazy" as the concept of dreamy treatment for employees.
I have found the Amazon Fire phone to be strategically puzzling from the get-go, to put it mildly. Even before we learned for a fact that it's been a money-losing endeavor, it didn't take much to guess it might have little chance of success. It was simply too late to the game.
Most people are already enamored of Apple's iPhone and Google's(NASDAQ:GOOG) Android offerings, and they have a major head start. Most phone owners have already picked one of those teams in the phone battle.
In October, investors learned that the Fire phone had indeed been a flop. Amazon had $83 million in unsold units piled up, and it announced a $170 million writedown. However, instead of backing down, it appears that Amazon is going to double down on that phone. And it looks like that's because it's someone's baby.
A recent Fast Company article, "The Real Story Behind Jeff Bezos's Fire Phone Debacle and What It Means for Amazon's Future," got the inside scoop from some Amazon employees who had worked on the product -- it's interesting reading, and even a bit unsettling. It paints a picture of a phone that was built for Bezos' specifications, and not only lacked strategy, but also didn't particularly take into account what customers even want.
Furthermore, it brought up something that investors should wonder about: Has Amazon finally bitten off more than it can chew with its aggressive footholds in so many areas?
I still believe that Amazon has many hallmarks of greatness. I'll still be a loyal Amazon customer. In the investing sense, I still believe it remains difficult to value or even completely fathom Amazon given the reach of its business. I fully admit I may leave money on the table by selling now.
However, I can't get past my nagging sense that, finally, this company really is trying to do too much, all the while neglecting to direct focus in one place that would be a very, very wise place to "double down."
Given the fact that Amazon shares recently hit a new 52-week high, at least I feel I'm bidding this stock goodbye on a high note.