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The conventional wisdom about Amazon is that its prices are so low that it earns no money. But Thomas Paulson, principal at Minneapolis-based Inflection Capital Management, points out that, when you strip out its enormous investment in itself, Amazon earns exceptional profits.

Expand chart
Data: Amazon's and Walmart's 10-Ks and 10-Qs, and Inflection Capital analysis; Note: Retail profit margin is before taxes, interest payments, and other adjustments including .com losses at Walmart. Amazon data only includes already developed markets, and not Prime Video, G&A or tech & content costs. Chart: Andrew Witherspoon / Axios

Why it matters: Walmart's gross revenue is far greater than Amazon's—$485.9 billion in 2016, compared with $136 billion for Amazon. And Walmart is earning big net profits now. But Amazon's higher margins — and its upward trajectory — are a signal for what could be coming down the road if CEO Jeff Bezos decides to start delivering more cash to shareholders.

By the numbers: After spending for expansion, such as developing its market in India, China and Europe, along with other costs such as taxes, Amazon earned about 16 cents on every dollar in 2016 sales, Paulson says. That is 140% higher than Walmart, Amazon's greatest competition at the moment, which compares with 6.8 cents of net profit before such costs (chart above).

Go deeper

"An embarrassment": Biden condemns Border Patrol for using horses to deter Haitian migrants

President Biden speaking from the White House on Sept. 24. Photo: Al Drago/Bloomberg via Getty Images

President Biden on Friday condemned Border Patrol officers for using horses to deter Haitian immigrants from an encampment under the international bridge earlier this week but took responsibility for the actions and said an investigation is underway.

Why it matters: Photos of patrol officers charging their horses at immigrants prompted criticism of the Biden administration's handling of the crisis at the border.

Senate GOP pushes DOJ to roll back Trump oversight rule

Photo by Chip Somodevilla/Getty Images

Senate Republicans want the Justice Department to roll back Trump-era restrictions on congressional oversight criticized at the time as an attempt to insulate the Trump administration from Democratic investigators, Axios has learned.

Why it matters: While some Republicans spoke out against the DOJ guidance at the time, it was mostly Democrats who attacked it as a constitutionally dubious effort to scuttle congressional oversight. Now the shoe is on the other foot, and the GOP is making similar arguments with Biden in the White House.

Dan Primack, author of Pro Rata
60 mins ago - Economy & Business

The great venture capital resignation

Illustration: Rae Cook/Axios

A growing number of top VCs are calling it quits, long before typical retirement age.

Between the lines: Generational turnover isn't new for venture capital, but in the past it's been born of lean times. What we're seeing now is the byproduct of unprecedented success.

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