Amazon showed in its fourth quarter 2020 earnings report the highest quarterly revenue in its history – the company earned $ 125.56 billion, for the first time exceeding the symbolic mark of $ 100 billion. Refinitiv forecasts estimated revenue at $ 119.7 billion. The same forecasts gave $ 7.23 earnings per share, but in reality it turned out to be twice as high – $ 14.09.
Amazon’s brilliant fourth-quarter results are driven in part by a record-breaking Christmas season, with over a billion items delivered to customers worldwide. Continued growth in online shopping demand and the Prime Day postponed to fall due to the pandemic contributed to record revenue for Amazon. The company is actively hiring new employees to keep up with the surge in demand. Amazon hired 175,000 full-time and part-time new employees in the fourth quarter alone – three times the number it hired in the same period last year. Amazon currently employs about 1.3 million people worldwide, up 63% from a year earlier.
In addition to its core retail business, Amazon’s cloud computing division increased revenue 28% to $ 12.7 billion from $ 9.95 billion a year earlier. That fell short of Wall Street’s $ 12.83 billion expectations. Amazon does not report separately its advertising business, but it makes up the bulk of its other category, which generated $ 7.9 billion in revenue for the quarter. This is 64% more than a year ago. Sales at Amazon physical stores, including Whole Foods Market, fell 8% as the pandemic pushed shoppers to experiment with new shopping methods, including ordering groceries online.
By the way, during the last quarterly report, the company also announced an important change in management: the head of Amazon Web Services Andy Jassy (Andy Jassy) will replace Jeff Bezos (Jeff Bezos) as CEO of Amazon in the third quarter of this year. The latter will remain the chairman of the board of directors. Mr Bezos said that in his new position he will focus on new products and promising initiatives, including Day One Fund, Bezos Earth Fund, The Washington Post and private space company Blue Origin.
“If you do it right, a few years after an amazing invention, a new thing will become the norm. People will start yawning. This yawn is the greatest compliment an inventor can receive.– wrote Mr. Bezos. – When you look at our financial results, you actually see the long-term cumulative results of our inventions. Right now I can see that Amazon is at its peak, and therefore is the optimal time for handover. “
In a conversation with investors, Amazon CFO Brian Olsavsky noted that the company has a very effective succession plan that will ensure a smooth transition to Mr. Yassi as CEO. The new head of the company will be able to leave his mark, but Mr. Bezos is not completely removed from management. “I repeat that Jeff is not leaving. He has a new job – said Brian Olsavsky. – He will be involved in solving many large problems – we call such issues “one-way doors”, that is, we are talking about key decisions like acquisitions, approving strategies, entering the grocery market, and the like. So Jeff will always be involved in solving such problems. “
After months of massive investment, Amazon said it would bring coronavirus-related costs down to about $ 2 billion in the first quarter of 2021. For comparison: in the third quarter of last year, they reached $ 4 billion. This is due to a decrease in sales. “We expect sales volumes to fall by about 25% in I quarter compared to IV“– said Brian Olsavsky.
Amazon predicts operating income of $ 3-6.5 billion in the first quarter. The total volume of sales will amount to $ 100-106 billion, which is significantly less than in the fourth quarter of 2020, but 33-40% more than a year ago. Analysts expect revenue to be $ 95.8 billion.
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