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February 2, 2021 4:45 PM, EST

Amazon CEO Jeff Bezos to Step Down in Q3

Andy Jassy Will Take Role; Company Reports Record Q4 Earnings
Bezos Bezos (Andrew Harrer/Bloomberg News)

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Amazon.com founder Jeff Bezos will step down as the online giant’s CEO but will stay on as executive chairman, the company announced Feb. 2.

The announcement accompanied the release of Amazon’s fourth-quarter financial results. Bezos will hand the CEO reins to Andy Jassy — who currently heads the Amazon Web Services division — in the third quarter of this year, the company said in the release.

“Amazon is what it is because of invention,” Bezos said. “We do crazy things together and then make them normal.

“If you do it right, a few years after a surprising invention, the new thing has become normal. People yawn. That yawn is the greatest compliment an inventor can receive. When you look at our financial results, what you’re actually seeing are the long-run cumulative results of invention. Right now I see Amazon at its most inventive ever, making it an optimal time for this transition.”

Jassy

Jassy speaks at a past company event. (David Paul Morris/Bloomberg)

Jassy joined Amazon in 1997 as a marketing manager and in 2003 helped found Amazon Web Services. He is a part-owner of the new Seattle National Hockey League franchise the Seattle Kraken.

Amazon’s Q4 net income increased to $7.2 billion, or $14.09 per diluted share, compared with net income of $3.3 billion, $6.47, in Q4 2019. Net sales increased 44% to $125.6 billion compared with $87.4 billion a year ago. It was the first time that Amazon pushed past the symbolic $100 billion mark in sales.

Excluding the $1.7 billion favorable impact from year-over-year changes in foreign exchange rates throughout the quarter, net sales increased 42% compared with Q4 2019. Operating income increased to $6.9 billion compared with $3.9 billion in Q4 2019.

The company’s results beat Wall Street’s expectation of $119.7 billion in quarterly revenue and net income of $3.7 billion.

For the year, net income increased to $21.3 billion, $41.83, compared with net income of $11.6 billion, $23.01, in 2019. Net sales increased 38% to $386.1 billion, compared with $280.5 billion in 2019. Excluding the $1.4 billion favorable impact from year-over-year changes in foreign exchange rates throughout the year, net sales increased 37% compared with 2019.

Operating income increased to $22.9 billion, compared with operating income of $14.5 billion in 2019.

While Amazon did not report exact gross merchandise value for its Prime Day, Black Friday and Cyber Monday sales, it said third-party sellers grew by 60% year-over-year during each of the three events. It also said it benefited from the decision to move Prime Day to October from July this year due to disruptions from the COVID-19 pandemic.

During the holiday shopping season Amazon said small and medium-sized businesses in the U.S. sold nearly one billion products on its site. The company hired 175,000 new employees in Q4 to meet soaring e-commerce demand.

Amid the pandemic, the company has spent an additional $2.5 billion in pay for its frontline workers. Starting pay for all employees is now at least $15 an hour.

Bezos founded Amazon 27 years ago. In a memo to employees he said the leadership transition will provide time for him focus on other interests, including the Day 1 Fund and Bezos Earth Fund non-profits, as well as businesses including Blue Origin and The Washington Post.

The Day 1 Fund promotes Montessori-inspired preschools in underserved communities and the Bezos Earth Fund works to reverse climate change. Blue Origin is a privately-funded aerospace manufacturer and sub-orbital flight company that Bezos founded in 2000. Its goal is to make space less expensive and more reliable through use of reusable rockets.

In 2013 Bezos purchased the Post from its longtime owners, the Graham family, for $250 million.

Looking ahead to Q1 2021, Amazon expects net sales to be between $100 billion and $106 billion, for growth of between 33% and 40% compared with Q1 2020. The company expects operating income of between $3 billion and $6.5 billion, compared with $4 billion Q1 2020. This guidance assumes approximately $2 billion of costs related to COVID-19.

Amazon also announced the design and location of its new East Coast headquarters, which is slated to be built in Arlington, Va., just across the Potomac River from Washington, D.C. and within sight of the Pentagon.

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