Dear Amazon Shareholders: We Want to Rule the World! Love, Jeff Bezos.

Investors pushed Amazon’s stock price to a record high today, with shares trading near $200 a share before closing at $196.63 a share.

The stock pushed higher despite yesterday’s mixed financial results, which included a huge plunge in profits.

Why so? Because it’s clear that investors are happy with the company’s top-line revenue increases and are salivating at Amazon’s growth story, which increasingly has to do with both physical and digital products.

A letter sent to shareholders from the company’s founder and CEO Jeff Bezos today probably helped fuel the fire as well.

Instead of spicing up yesterday’s dry earnings call with a guest appearance, Bezos typed out his thoughts, revealing some of the company’s technical inner workings in a two-page missive filed with the SEC.

The gist of the Bezos letter–although he didn’t come out and say it–was that there were several justifications for the investments Amazon is making, which is what has been weighing down its bottom line.

Bezos essentially explained that since Amazon is doing something that has never been done before, there’s no off-the-shelf technology that can solve the problems the company is tackling.

Said the letter, in part:

While many of our systems are based on the latest in computer science research, this often hasn’t been sufficient: Our architects and engineers have had to advance research in directions that no academic had yet taken. Many of the problems we face have no textbook solutions, and so we–happily–invent new approaches.

Despite the dozens of warehouses that Amazon has and the nine-plus new distribution centers it’ll build this year, Bezos also argued that the company was a “services” business.

If that’s the case, you have to wonder what is Amazon building? Will they be bigger than Wal-Mart Stores? Will it snuff out eBay? Can it be the next big rival to Apple?

In fact, finding a company to compare Amazon to is increasingly difficult. After eBay announced its earnings today, it couldn’t be any more apparent: The Silicon Valley online auction site wants to connect the physical and online retail worlds together, and is focusing on its PayPal division, which now makes up 39 percent of the company’s revenues.

Meanwhile, Amazon’s new endeavors cross a wide range of categories, but definitely don’t mingle with physical retail presences. If anything, it is headed in the other direction by focusing on digital content–stuff you store in the cloud. Its recent launches, such as the Cloud music player and the Android Appstore, are only two examples.

Also in the letter, Bezos went on a tangent about how to build a specialized syncing technology that allows customers to seamlessly read the same books across multiple devices, before moving back to the key money quotes.

“I will awaken you by pointing out that, in my opinion, these techniques are not idly pursued,” he wrote. “They lead directly to free cash flow.”


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There was a worry before I started this that I was going to burn every bridge I had. But I realize now that there are some bridges that are worth burning.

— Valleywag editor Sam Biddle