In a major announcement, Jeff Bezos, Amazon’s founder and CEO has revealed he is going out on top, announcing his intention to hand over the reins of the e-commerce giant in the northern summer and move to the role of executive chairman.
Andy Jassy, the CEO of Amazon’s cloud computing division (and its fastest growing business in recent years), will replace Bezos.
The announcement came after Amazon blew away all estimates and fears about sales 9a record), profits (a record) and forecasts of a repeat this quarter.
Mr. Bezos had been moving away back from much of the day-to-day business in recent years, but the pandemic saw him become more active from March last year as the pandemic and lockdowns boosted Amazon’s business in dramatic fashion.
“Right now I see Amazon at its most inventive ever, making it an optimal time for this transition,” Mr. Bezos said in a statement that came with the company’s 4th quarter results which revealed Amazon had its biggest ever quarter with more than $US125 billion in sales.
The 4th quarter performance saw sales soar from $US87.44 billion in the final three months of 2019 to the record $US125.56 billion and up sharply from the $US96 billion in the three months to last September.
Amazon joined Apple in reporting sales of more than $100 billion for a quarter for the first time (Apple did it last week).
Amazon expects another record quarter in the three months to march (normally a period of softer sales after the Thanksgiving-Christmas period in the December quarter). The company said it anticipates first-quarter net sales will come in between $US100 billion and $US106 billion.
Amazon Web Services (AWS – the cloud business that was run by the incoming CEO) grew quarterly sales 28% to $US12.74 billion.
That year-over-year growth rate was steady on the third quarter but slowed compared to all of 2019, as the segment matures.
And the 4th quarter results saw much better earnings performance while investors’ fears about $US4 billion in extra costs because of the pandemic proved to be groundless.
Operating income grew 77% to $US6.87 billion in the fourth quarter, easily beating estimates around $US4.47 billion.
In its October third quarter results, Amazon said its operating income in the fourth quarter would come in between $US1.0 billion and $US4.5 billion, when factoring in costs of about $US4.0 billion in costs related to COVID-19.
Amazon sees operating income coming in between $US3.0 billion and $US6.5 billion for the current quarter.
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Meanwhile Alphabet (Google) revealed better than expected fourth-quarter sales and disclosed for the first time that its Cloud unit is losing money at an annual rate of $US5.6 billion.
Google’s advertising business, including YouTube, accounted for 81% of Alphabet’s $US56.898 billion in fourth-quarter sales, which were up 23% compared with the pre-COVID 4th quarter a year ago.
Budget cuts by travel and entertainment advertisers in 2020 (which knocked ad revenues lower in the first half of the year) were nearly made up as the year went on by new spending from retail and other clients who were driven online by the COVID-19 pandemic.
Alphabet said Google Cloud posted a quarterly operating loss of $US1.24 billion. Google Cloud sales were $US3.831 billion. It is a long way behind Amazon’s AWS.
Alphabet is now in a second rank of tech giants – Apple and Amazon are far ahead, Facebook continues to grow quickly, single business Netflix is making gains and Alphabet is now stuck in a medium growth pattern.
