The business world roared and erupted tonight after Amazon (AMZN), the network’s largest retailer and provider of cloud services in the world, presented record results for the last quarter of 2020. Why did the business world buzz so much? Not because of the record revenue of $ 126 billion for the quarter, but because Jeff Bezos, the company’s founder and CEO – and the second richest man in the world – announced his retirement from his position as CEO.
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Unlike the case of Apple (AAPL), where the company had to deal with the dying cancer of founder and CEO Steve Jobs, there is no problem with Bezos’ health – at least as far as we know. Bezos will still be the chairman of the board.
The comparison between Bezos and Steve Jobs is not only correct, it is obvious. Because just as Jobs was a genius who introduced the world to the iTunes, iPhone and iPad, Bezos is a genius in his own right, who managed to change the rules of the game in online retail with both hands – but he was not content with that and ran over, literally, every part of Amazon wanted a foothold.
The history of Amazon in a nutshell
Bezos founded the company in 1994, when the commercial Internet was in its infancy. At first, the platform was a kind of open market for the sale and purchase of books. In light of the popularity gained by the platform, furniture, food, toys and more quickly developed into trading in electrical appliances. But that was just the beginning. The company opened AWS and took over the US cloud market.
How big is AWS? First of all, it accounts for 60% of the group’s operating profit, while in 2020 AWS’s sales increased by 30% compared to 2019 and its revenues totaled 45 billion. As the owner of 30% of the cloud services in the US, is it so big that at the end of the previous year there was a problem with the company’s servers and the result? The internet was shut down in almost every east coast of the US.
Regardless, in 2015 Amazon overtook Walmart (WMT) as the largest U.S. retailer and in 2017 it acquired food retailer Holfoods in 2017 for over $ 13 billion. Bezos did not stop there. It has the television services, Amazon Prime, Amazon Content Production Studio, while Amazon also manufactures electronic products, including Kindle and Eco devices, in addition to introducing the world to the personal electronic assistant, Alexa and also in its possession of the online content giant IMDB.
In short a monster. How much? The company’s revenue surpassed the early forecast and totaled $ 126 billion compared to $ 120 billion. In the same quarter, the company generated $ 87 billion and in the previous quarter $ 93 billion. That is, its revenue rate is 50% in an annual outline, a rate that probably cannot be continued, but does help to describe the company’s delusional growth rate. By the way, this is the first time the company has crossed the $ 100 billion revenue threshold in just one quarter. The same threshold that Apple also crossed for the first time in the current quarter.
Bezos has quite a few other businesses outside of Amazon. One is Blue Origin Commercial Space Company, which is on its way to launching commercial services. Another business that Bezos acquired was the world-renowned daily newspaper, The Washington Post, which it acquired in 2013 for $ 250 million.
Bezos’ retirement is requested
As in the case of Apple, the one who will replace Bezos is a right-hand man in the last two plus decades, Andy Jesse. Jesse joined the company back in 1997 and is the one who founded and managed the most monstrous arm of Amazon, or AWS as mentioned. In other words, the market knows him and knows that he is a shrewd businessman, who is involved in the bowels of the company’s most important business aspect.
In Apple’s case, there were concerns in the market about the ability of heir, Tim Cook, to continue Apple’s quality tradition. Not only have the fears been dispelled, Cook has turned Jobs’ baby into a huge economic monster that nothing stops him, as we have seen in the company’s recent reports. In the case of Amazon, not only is there no concern, Bezos’ retirement is even called for. Not for nothing did the stock rise 2% in late trading on Tuesday night.
Why are you being asked? few reasons. The first and most critical of all is Bezos himself. Is the face of society for better or worse. He was perceived as having created a standard of work that was sometimes described as exploitative, especially by his workers in the supply centers, along with excessive intrusion into the privacy of all workers. But all this was of course forgiven him by the market, even though his public image suffered quite a bit of damage.
But what bothers him and society in particular is the regulatory scrutiny in the United States. In recent years it has become a practice for Bezos to appear before congressional committees – either in person or online in Corona. Moreover, unusually, members of Congress on both sides of the barricade have stated in their review that the tech giants, including Amazon, are too large and that new rules of the game need to be enacted, ones that can also dismantle some of their assets.
In this sense, Bezos, who must be tired of the whole thing, retires after the record. By the way, he is not really retiring. He will still be the chairman of the board and will likely still be the one to determine everything that happens on Amazon. But he, too, probably realized that as long as he is the face of the monster he created, regulatory pressure on Amazon will not only not go down, but will increase.
We saw this in the government tender for cloud services, where former President Donald Trump announced that Amazon would not win the tender, because of the democratic affiliation of Bezos, who was one of Trump’s most scathing critics. In the end, after a lawsuit, Microsoft (MSFT) still came out on top.
Presumably now Bezos will continue to function as the global octopus it is, only without the spotlight it will be able to navigate there much more efficiently and with much less pressure. In the meantime, until U.S. regulators decide on Amazon’s future, one can only assume that the company will continue to grow and grow under the scepter of Jesse, whose biggest challenge is to minimize future regulatory harm to the company as much as possible, and Bezos can concentrate on his desire to take over as well. The space.
Bank Leumi notes that similar to what happened at Microsoft, where “Bill Gates transferred the reins not to the head of the Windows division but rather to the head of the AZURE division, the company’s cloud division, so the new CEO actually comes from the cloud computing (AWS) sector and not the retail sector.” This is according to Shmulik Karpaf, a foreign securities analyst at Bank Leumi.
The two giants will come under the control of people from the field of cloud computing and not from the field of retail. The results of the line of thought in both companies – will be seen in the coming years.