Daily Management Review

Amazon Reports Fourth Straight Quarter Of Record Performance


Amazon Reports Fourth Straight Quarter Of Record Performance
The largest e-commerce company of the world Amazon.com Inc, which immensely benefited from the online shopping spree during the pandemic, said that it believes that the consumers who had started to purchase online will not likely shift to buying from physical stores even as the company reported record quarterly profits. The company also signalled that consumers in recovering economies such as the United States will continue to spend.

Amazon has been the company of choice for consumers for delivery of home staples since the start of the coronavirus outbreak and the e-retailing company id of the opinion that this trend will continue even after the pandemic is over.
Four consecutive record quarterly profits was reported by Amazon as the company attracted more than 200 million Prime loyalty subscribers while also recruiting more than 500,00 people to meet the growth in demand.
The operating income of the company is likely to be between $4.5 billion and $8 billion for the current quarter which includes about $1.5 billion in costs related to Covif-19, Amazon said.
The company has faced troubles at its workplace throughout the pandemic and a failed attempt to unionize an Amazon warehouse in Alabama. The company is also facing litigation in New York over whether it put profit ahead of employee safety. read more
A growth in Prime subscriptions, much higher rate of use of Amazon for grocery delivery by consumers and an improving economy benefitted Amazon even as the company had emerged mostly unscathed from the issues it faced since the start of the pandemic, said Michael Pachter, an analyst at Wedbush Securities.
"Habit. Good quality grocery. Stimulus checks," Pachter said. "They're going to thrive."
Pachter said that the company reporting lower growth in sales for the latest completed quarter compared to the previous clearly indicates the difficulty in comparing such figures with an unusual last year.
The performance of the company’s cloud computing unit Amazon Web Services (AWS) was praised Amazon CEO Jeff Bezos in a press release. "In just 15 years, AWS has become a $54 billion annual sales run rate business competing against the world's largest technology companies, and its growth is accelerating," he said.
The appreciation from Bezos are also viewed by analysts as a shot in the arm for Andy Jassy, the long-time head of the AWS's cloud business and who is scheduled to succeed Bezos CEO later this year.
Last week, a deal for Dish Network Corp to build its 5G network on AWS was announced by Amazon even as the company reported a 32 per cent growth in the revenues of the division during the quarter to $13.5 billion which comfortably beat analysts' average estimate of $13.2 billion, according to IBES data from Refinitiv.
Businesses increasingly wanted to outsource their technology infrastructure to AWS, said Brian Olsavsky, Amazon's chief financial officer.
"We expect this trend to continue as we move into the post-pandemic recovery," he said.