Amazon revealed yesterday that its founder Jeff Bezos will step down from the role of CEO later this year and become Executive Chairman. The announcement was made after the online giant reported its third consecutive record profit and quarterly sales above $100bn for the first time.
Bezos, who started Amazon from his garage nearly 30 years ago, will be replaced in the third quarter of the year by Andy Jassy who currently leads Amazon’s successful AWS cloud computing business.
Bezos, who is the world’s richest man, said the transition to Executive Chairman will give him more “time and energy” to focus on his other ventures that include the Bezos Earth Fund, space exploration company Blue Origin, and The Washington Post.
He also stated that he would continue to focus on new products and initiatives. “When you look at our financial results, what you’re actually seeing are the long-run cumulative results of invention,” he said. “Right now, I see Amazon at its most inventive ever, making it an optimal time for this transition.”
Amazon saw its already explosive growth skyrocket last year, as the pandemic prompted a surge in online shopping. During the final quarter of 2020, the group’s net sales surged up 44% to $125.6bn, with operating profit increasing from $3.9bn to $6.9bn. Results were boosted in part by renewed lockdowns in some parts of the world as well as a later date for the firm’s ‘Prime Day’ sales event.
For the year as a whole, the firm’s total sales climbed 38% to $386bn with operating profits jumping 58% to $22.9m. Its online stores and third-party seller services grew revenues by around 50%, whilst subscription services and AWS grew 35% and 28% respectively. Only the performance of its physical stores division was disappointing with sales down 8%.
The decision by Bezos to hand over the day-to-day operation of the company came as a surprise, although investors appeared unfazed with little change in the firm’s share price.
In a call with analysts to discuss the financial results, Amazon’s CFO Brian Olsavsky said: “Jeff is not leaving, he is getting a new job… The board is super active and important in Amazon’s success story.”
Jassy has been with Amazon since 1997 and helped develop the AWS business which has become a key profit driver from the company. The division provides cloud computing and storage for governments and companies including McDonald’s and Netflix.
“Andy is well known inside the company and has been at Amazon almost as long as I have. He will be an outstanding leader, and he has my full confidence,” said Bezos.
Looking ahead, the company said it had expected to post revenue of between $100bn and $106bn in the current quarter. That would represent an increase of up to 40% from the previous year.
NAM Implications:
- Inevitable, given thirty years at the helm.
- But especially given the growing size and complexity of the business…
- …and the attendant issues involved.
- Unlikely though that Mr B will move back very far from the front line…
- (I mean, would you?)
