Everyone knew the day was coming, but investors were still surprised when Jeff Bezos announced his resignation as CEO.
Amazon.com
there has never been another chief executive, after all, and Bezos originally built the business into one of the largest companies in the world, with 1.3 million employees, annual revenue nearly $ 500 billion, and a market value of $ 1.7 trillion.
No one ever launched a company and they managed it to a value of more than $ 1 trillion while still at the helm. By that measure, Bezos is more successful than Steve Jobs, Bill Gates, Warren Buffett, Sam Walton,
Walt Disney,
Henry Ford, Andrew Carnegie, or John D. Rockefeller.
Amazon shares (ticker: AMZN) have been adding value every year since 2014, increasing more than tenfold over that range. The company has spent years pushing its profits in e-commerce. A growing fleet of delivery trucks and jets serves large warehouses manned by humans and robots.
And, nonetheless, the real value of what has been revealed is Amazon Web Services, an idea that was nurtured by Bezos vice-president Andy Jassy – yes, the man who replaced Bezos as CEO later this year.
In July 2002, Amazon issued a short press release featuring Amazon.com Web Services. Bezos said that Amazon was “issuing a welcome mat to developers,” saying favorably, “this is an important start and a new direction for us. The word “cloud” was not mentioned.
Today, AWS is the equivalent of cloud computing. In the fourth quarter, it had revenue of $ 12.7 billion, raising the total for the year to $ 45.5 billion, up 29%. AWS 2020 ended with a reserve of $ 50 billion, 68% above the previous year’s total. The industry has grown more than 475% since the end of 2015, and next year’s sales will easily exceed $ 50 billion. Many cloud software companies – most of which would not be without AWS – trade for 20 hours of sales or higher. Apply that amount to AWS and the industry is worth over $ 1 trillion.
Jassy has been Head of Amazon Web Services since his humble beginnings, and became a logical follower of Bezos following the recent retirement of Jeff Wilke, director of retail business company long ago.
Taken together, there has been a lot of change for Amazon in a short period of time. Wilke’s replacement, Dave Clark, has just settled into his new role. Jassy gets the main job. Bezos moves to executive chair. And someone not yet named will accept AWS.
If there’s any reason to warn about Amazon, it would be an AWS leadership space just as competition in the cloud market heats up.
There are real competitors now for AWS, though the detailed math is fuzzy.
Alphabet
(GOOGL) had $ 3.8 billion in cloud revenue in the quarter, up 47%, and the company said its Google Cloud Platform, which competes with AWS, grew even more. soon. But that category also includes Google Workspace, which competes with Microsoft Office.
Microsoft
(MSFT) had “connected cloud” revenue of $ 16.7 billion in its most recent final quarter, but that includes more than just Azure, Microsoft’s direct competitor to AWS. Microsoft also puts Office 365 and a cloud version of its Microsoft Dynamics enterprise application business in its cloud bucket.
Oracle
(ORCL) and
IBM
(IBM) is also suing many cloud businesses. But Amazon is still the main player, and not a few.
There are a number of reasons why Amazon doesn’t seem to be missing a beat during the CEO transition.
First, as executive chairman, Bezos said he plans to spend time thinking about new products and early ventures, where he has always been successful. “Keep inventing, and don’t be disappointed when the idea first looks deceptive,” he wrote in a letter to Amazon staff last week. “Remember to walk. Curiosity should be your compass. It’s still Day 1. ”Bezos is the largest investor in the company, with a bet worth around $ 200 billion.
Second, Jassy has been at Amazon for 23 years. This is the only place where he has worked since graduating from Harvard Business School in 1997. He has a strong reputation among Amazon viewers, is loved by Wall Street, and is trusted by Bezos. . So Jassy was the obvious choice.
Finally, the transition is happening at a time of strength for Amazon. In the fourth quarter, sales totaled $ 125.6 billion, up 44% from the previous year’s total, blowing past Wall Street estimates. Analyst forecasts nearly doubled profits of $ 14.09 a quarter in the latest quarter, even though the company spent more than $ 4 billion in the period to protect employees against Covid-19.
Jassy was already running the most important part of Amazon. This is no longer an e-commerce company with cloud computing entertainment; AWS is now worth more than the sales department.
And yet it’s hard to separate Amazon from Bezos. The stock fell 2% on the movement news, despite being accompanied by banner earnings results. Any weakness could be a buying opportunity. Last week, Morgan Stanley analyst Brian Nowak reiterated his fat rating on the stock, raising its price target to $ 4,200 from $ 3,900 and setting a “bull issue” target of $ 5,000, 50% above Amazon’s recent $ 3,352 closing.
His idea is that Bezos will still be around, Jassy knows what he’s doing, the bench is deep, e-commerce is still accelerating, so are Amazon Web Services.
The bottom line: Amazon is ready to be close to post-Bezos.
Write to Eric J. Savitz at [email protected]