What do we think would happen to the retail Amazon if it did not have the giant profit-center of AWS? Presumably it would crumble under a lack of profit, or start doing the MBA thing to generally worsen everything to drive up the quarterly results.
How would you split that between AWS and Retail?
Depending on how much of the value goes along to AWS... retail could look like a lot of high value / low margin businesses that do just fine. Obviously if you give 99% of the value to retail and pull the profit center, it would be bad. But that wouldn't happen.
Remember that Market cap = Enterprise value - Net debt.
We can argue that enterprise value of business is different, but by changing net debt figure of each company we can make market cap of both firms equal
If the multiples of each business were the same, we'd expect a roughly 75/25 split along the lines of profit, but the multiples are probably not the same, and that's the interesting part of the question. It represents market judgement on the future growth trajectories of e-commerce vs e-infrastructure.
"Obviously if you have an opinion that retail has 99% of the market cap and pull the profit center, that would be bad".
What in the world is that supposed to mean? Our opinions aren't going to affect the world, there will no consequences if somebody has that opinion. How is it bad? And with that interpretation, I have no idea of what "pull the profit center" could mean. Because that has to be talking about the way you split the company, not about an opinion you'd have.
You don't split the market cap of a company? Really?
If I have a company worth 1 billion dollars and split it exactly down the middle in assets and liabilities, the assigned value of each company is nowhere near 500 million dollars?
Yes you will lose a little bit in terms of "lost synergies", but the starting point for a split (or a merger) is to add together or divide up the market cap.