Amazon.com Inc on Tuesday said founder Jeff Bezos would step down as CEO and become executive chairman, as the company reported a third consecutive record profit and quarterly sales above $100 billion for the first time.
The transition, slated for the summer, will make current cloud computing head Andy Jassy the next chief executive of Amazon.
Jassy 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.
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 Corp and cloud rival Microsoft Corp, which AWS continues to exceed in sales.
He has bestowed a rock-star aura to keynotes at AWS’s annual Las Vegas conference, speaking before over 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.
Bezos, age 57, added, “I’ve never had more energy, and this isn’t about retiring.”
COVID SPENDING DOWN
Net sales rose to $125.56 billion as consumers turned to the world’s largest online retailer for their holiday shopping, beating analyst estimates of $119.7 billion, according to IBES data from Refinitiv.
Amazon shares were up less than 1% 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 $12.7 billion, short of the $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 U.S. 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 over 400,000 more workers to keep up with demand.
That has placed the Seattle-based company at the center 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 unionize in the United States, with an election to begin next week.
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 $2 billion, down from $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 U.S. President Joe Biden – saying it is eager to offer vaccine shots to staff.
Amazon beat fourth-quarter estimates for online store sales, subscription sales, third-party service sales such as warehousing and other sales to merchants on its platform.
A boost in revenue came from moving Amazon’s marketing event Prime Day – usually in July – to October, lengthening the holiday shopping season.
(Reporting by Akanksha Rana in Bengaluru and Jeffrey Dastin in San Francisco; Additional reporting by Subrat Patnaik in Bengaluru; Editing by Anil D’Silva and Lisa Shumaker)