In a story that can only happen in the delusional cloud of tech stock valuations, Jeff Bezos is serious about using drones to deliver Amazon products.

Amazon Drones UPS

In his recent letter to investors, Bezos discusses a number of cutting edge improvements to the company – but very rarely engages in a discussion of cost relative to benefits.  Those pesky profit considerations and unpleasant math isn’t required in the tech world, apparently.

Long on talk of Amazon’s innovation, short on cost/benefit analysis

The letter, where Bezos pontificates regarding every aspect of his growing number of innovations, doesn’t address deep cost / profit analysis.   The closest he comes in a light version of traditional P&L analysis is when he addresses the value of his Prime members, but again not addressing the cost. “On a per customer basis, Prime members are ordering more items, across more categories, than ever before,” he wrote, while not addressing the bottom line impact of the well publicized increase in cost of the prime membership from $79 to $99.

Pay employees to leave company

Bezos is long on innovation and short on good old fashion ability to generate revenue.  The company has a program that pays its employees to quit, up to $5,000 depending on seniority. “The goal is to encourage folks to take a moment and think about what they really want. In the long-run, an employee staying somewhere they don’t want to be isn’t healthy for the employee or the company,” Bezos writes, explaining his logic.

CIA contract with Amazon not mentioned

Conspicuously absent from the discussion was mention of Amazon.com, Inc. (NASDAQ:AMZN)’s $600 million contract with the US Central Intelligence Agency to provide server and technical consulting. Did Bezo’s acquisition of the powerful Washington Post play into the disputed decision to award Amazon the business?  That’s obviously speculation without documentation, but it wouldn’t be the first time the increasingly militarized US government would make subtle moves trying to influence the media.

Can individually delivered packages match the cost of mass “assembly line” package delivery? Bezos doesn’t address the issue

Delivering packages cost effectively requires scale, to which United Parcel Service, Inc. (NYSE:UPS) and Federal Express are evidence. A driver enters a neighborhood and delivers multiple packages on a daily basis.  Does Amazon.com, Inc. (NASDAQ:AMZN) have such scale?

In the letter, Bezos notes continuing developments in its warehouse distribution system, now numbering 96 locations across the US. The distribution system is going worldwide, as the letter notes that in Chinese cities, bike messengers are now the standard method of delivery.

When addressing “fast delivery,” Bezos notes the “partnership” with the US Post Office while at the same time addressing the Prime Air team – all without conducting a cost benefit analysis.  Can an individually piloted drone deliver a package to a single location more efficiently than an organization such as the post office which delivers batch orders on a daily basis going door to door with multiple items per stop?  Unlikely, particularly when considering the liability of operating a drone fleet.  But such logical thinking – that profits matter – still hasn’t hindered Amazon.com, Inc. (NASDAQ:AMZN)’s creative development.

P/E ratio?  Forget those pesky value considerations

With a P/E ratio that has averaged near 391, when will what is becoming an “old tech” company be brought down closer to earth and held to account for some simple profits?

Bezos continues to focus almost exclusively on innovation without a timetable on when it will pay off with tangible bottom line performance. “Failure comes part and parcel with invention,” he concludes in the letter. “It’s not optional. We understand that and believe in failing early and iterating until we get it right. When this process works, it means our failures are relatively small in size (most experiments can start small), and when we hit on something that is really working for customers, we double-down on it with hopes to turn it into an even bigger success. However, it’s not always as clean as that. Inventing is messy, and over time, it’s certain that we’ll fail at some big bets too.”