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All smiles for Amazon founder Jeff Bezos
All smiles for Amazon founder Jeff Bezos
Julie Bort

Amazon is notoriously tight-lipped about how much money it really makes on its cloud business, Amazon Web Services.

But it could be sitting on a unit that will generate nearly $4 billion of high-margin revenues this year, writes Macquarie Capital analyst Ben Schachter in a research note issued last week.

He believes that AWS will bring in $3.8 billion in revenue in 2013 and would be valued at a $19 billion company if were a stand-alone company.

And he, says, that's conservative, based on "our 2013 AWS revenue estimate." If he was aggressive enough to use an 8x multiple, AWS would be worth up to $30 billion, he writes.

Plus, AWS's gross margins are really high, he says because "Amazon runs all AWS costs, including employee/ operational and depreciation, through the Technology & Content expense line."

This meant that AWS contributed 190 points of overall gross margin to Amazon in 2011 and it will contribute more than 500 points by 2015, he says.

It all adds up to Amazon why he thinks Amazon's share price will hit $305 in the next 12 months. Amazon closed above $268 on Thursday.

But others wouldn't buy all of his analysis.

Amazon doesn't break out AWS revenue and margins in its financial reports. It lumps in AWS in its “other” revenue category. And another school of thought believes that Amazon sells its cloud services on razor thin margins, points out GigaOM's Barb Darrow.

We're pretty sure that Amazon is making at least a decent return for its effort with AWS, even if it's not the 500+ points of gross margin that Schachter envisions.

However, we're skeptical that enterprises will rush to Amazon more than other clouds available to them, from Google to Rackspace.

That's because, while Amazon is known for its cutting-edge cloud tech and low costs, it doesn't have a great reputation for reliability, a crucial consideration for an enterprise. All clouds go down at some point, but Amazon's outages are highly visible, such as the one that brought down Netflix on Christmas.

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FOCUS: Russia-Ukraine War

"Welcome To Our Hell..." Ukrainian Foreign Minister Dmytro Kuleba Speaks

In a rare in-depth interview, Ukraine's top diplomat didn't hold back as he discussed NATO, E.U. candidacy, and the future of the war with Russia. He also reserves a special 'thank you' for Italian Prime Minister Mario Draghi.

Dmytro Kuleba, Foreign Minister of Ukraine attends the summit of foreign ministers of the G7 group of leading democratic economic powers.

Oleg Bazar

KYIV — This is the first major interview Ukrainian Minister of Foreign Affairs Dmytro Kuleba has given. He spoke to the Ukrainian publication Livy Bereg about NATO, international assistance and confrontation with Russia — on the frontline and in the offices of the European Parliament.

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At 41, Kuleba is the youngest ever foreign minister of Ukraine. He is the former head of the Commission for Coordination of Euro-Atlantic Integration and initiated Ukraine's accession to the European Green Deal. The young but influential pro-European politician is now playing a complicated political game in order to attract as many foreign partners as possible to support Ukraine not only in the war, but also when the war ends.

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