Amazon's Bezos to step down as CEO; quarterly revenue tops US$100 billion for first time

Amazon's Bezos to step down as CEO; quarterly revenue tops US$100 billion for first time

FILE PHOTO: Jeff Bezos, president and CEO of Amazon and owner of The Washington Post, speaks at the
Jeff Bezos, president and CEO of Amazon and owner of The Washington Post, speaks at the Economic Club of Washington DC's "Milestone Celebration Dinner" in Washington on Sep 13, 2018. (Photo: REUTERS/Joshua Roberts)

NEW YORK: Amazon.com on Tuesday (Feb 2) said founder Jeff Bezos will step down as CEO and become executive chairman, as the company reported a third consecutive record profit and quarterly sales above US$100 billion for the first time.

This summer, Bezos, 57, will hand the keys of the world's largest online retailer to Andy Jassy, head of its cloud computing division. The announcement ends a long-running question about who would succeed the world's second-richest person at the company's helm.

Jassy, 53, joined Amazon in 1997 after Harvard Business School, founding Amazon Web Services (AWS) and growing it to a cloud platform used by millions, the company's website said. He had been a clear contender for the top job since Amazon created two CEO roles reporting to Bezos, the other held by recently retired consumer CEO Jeff Wilke.

Tom Johnson, chief transformation officer at Mindshare Worldwide, said Jassy's promotion underscored the importance of web services to Amazon's future.

"Jassy’s background in steering AWS shows just how top of mind those services are to Amazon's business strategy. It’ll be interesting to see how that affects their strategy and balancing that priority with a growing ad business and the commerce behemoth," he said.

Jassy is known for understanding technical details, and he has regularly taken jabs at legacy player Oracle and cloud rival Microsoft, which AWS continues to exceed in sales.

Under Jassy's leadership, Amazon's cloud business has signed major customers including Verizon, McDonald's and Honeywell. The division's quarterly revenue consistently rose by double digits, helping cement its position as the market leader.

One contract AWS failed to win was the US$10 billion "JEDI" contract from the Pentagon, which was awarded to Microsoft.

Jassy has bestowed a rock-star aura to keynotes at AWS's annual Las Vegas conference, speaking before more than 60,000 attendees in 2019 after upbeat music preceded his talk.

Bezos, who started the company 27 years ago as an Internet bookseller, said in a note to employees posted on Amazon's website, "As Exec Chair I will stay engaged in important Amazon initiatives but also have the time and energy I need to focus on the Day 1 Fund, the Bezos Earth Fund, Blue Origin, The Washington Post, and my other passions." Blue Origin is Bezos' space company, and the Post is his private newspaper holding.

He added, "I’ve never had more energy, and this isn’t about retiring."

READ: Elon Musk leaves behind Amazon's Bezos to become world's richest person: Bloomberg News

COVID-19 SPENDING DOWN

Amazon's net sales rose to US$125.56 billion as consumers turned to the world's largest online retailer for their holiday shopping, beating analyst estimates of US$119.7 billion, according to IBES data from Refinitiv.

Amazon shares were up less than 1 per cent in after-hours trading.

Jassy's AWS, traditionally a bright spot, fell slightly short of expectations in the fourth quarter. While the cloud computing division announced deals in the quarter with ViacomCBS, the BMW Group and others, it posted revenue of US$12.7 billion, short of the US$12.8 billion analysts had estimated.

Amazon said it was not announcing an AWS replacement for Jassy at this time.

Meanwhile Amazon's e-commerce business has never been as big. Since the start of the US coronavirus outbreak, consumers have turned to Amazon for delivery of home staples and medical supplies. While brick-and-mortar shops closed their doors, Amazon, recruited another 400,000 workers to keep up with demand.

That has placed the Seattle-based company at the centre of workplace tumult. More than 19,000 have contracted COVID-19 as of September, and some staff have protested and demanded facility closures. Others, at Amazon's Bessemer, Alabama, warehouse, are seeking to be the first at the company to unionise in the United States, with an election to begin next week.

READ: Bezos sells Amazon shares worth US$3.1 billion

Chief financial officer Brian Olsavsky told reporters on a conference call that costs associated with the pandemic in the first quarter are expected to total US$2 billion, down from US$4 billion in the fourth quarter as shopping volumes decrease. The company has taken an array of COVID-19 precautions and written government officials - including US President Joe Biden - saying it is eager to offer vaccine shots to staff.

A boost in revenue came from moving Amazon's marketing event Prime Day - usually in July - to October, lengthening the holiday shopping season.

Net sales for the current quarter are expected to be between US$100 billion and US$106 billion.

Source: Reuters

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