Tags: Financial Markets | Money | jeff bezos | andy jassy | amazon | cloud | computing

Jeff Bezos' Successor Points Amazon Toward the Cloud

andy jassy speaks during a conference
Amazon Web Services' Andy Jassy (Isaac Brekken/AP)

Tuesday, 02 February 2021 09:32 PM

Amazon.com Inc.'s earnings came Feb. 2 — Groundhog Day. And that is fitting in one way because the e-commerce giant, like the namesake movie that repeats the same day again and again, added another spectacular performance to a long streak of the same. Except this day was unlike any other in the company's history.

In the same breath Amazon announced its latest quarterly results, it said its founder Jeff Bezos will step down as CEO later this year. He will be succeeded by Andy Jassy, now head of Amazon Web Services, the company's cloud-computing powerhouse. The momentous development signals the importance of cloud services to the company's future. It also came as the company turned in its most dominant financial performance.

Amazon posted adjusted fourth-quarter earnings per share of $14.09, almost double Wall Street's $7.34 estimate, along with record-breaking revenue of $125.6 billion, 44% higher than a year earlier. It was the first time Amazon had quarterly revenue of more than $100 billion — and Bezos, 57, was proud.

"When you look at our financial results, what you're actually seeing are the long-run cumulative results of invention," he wrote in the earnings release. "Right now I see Amazon at its most inventive ever, making it an optimal time for this transition."

What a run it has been for Bezos. The entrepreneur started Amazon in 1994 with a simple online website to sell books. In the ensuing decades, including Amazon's IPO in 1997, his leadership drove the company's market value to a whopping $1.7 trillion as Amazon became a dominant force in numerous categories from e-commerce platforms, video streaming and digital advertising to fulfillment services and logistics. Bezos will go down as one of the most influential business executives in American history with his operational management prowess, inventiveness, and obsession with the customer experience.

Thankfully for Amazon's shareholders, Bezos plans to stay involved with the company, and will serve as executive chairman. In a letter to Amazon's employees, he wrote how he will focus on "new products and early initiatives," adding Jassy "will be an outstanding leader, and he has my full confidence."

Jassy, 53, is the right choice given the stunning success of Amazon Web Services. The unit has become the crown jewel of the companies' businesses and because AWS is so critical to Amazon's future, it is prudent to put Jassy in charge of the whole company.

The executive has led AWS since its inception in 2006, shepherding it to No. 1 among peers. According to Gartner's latest figures, AWS accounts for almost half of the cloud infrastructure-services market, which is more than double its nearest competitor, Microsoft Corp.'s Azure.

The proof is also in the financial numbers. To illustrate, AWS accounted for 52% of the company's December quarterly operating profits, while representing just 10% of its sales. And because corporations are still in the early innings of their transitions toward the more flexible model of cloud computing and away from in-house technology equipment, the prospects for AWS remain bright for the rest of the decade.

The leadership change happens at a time when Amazon will face more challenges this year. If life returns to normal on the back of wider vaccine distribution, many of the tailwinds that helped the company's businesses — from the shift to e-commerce to rising demand of remote-working Internet services — could turn into headwinds. The tech giant also faces antitrust scrutiny for its business practices from regulators around the world.

But Bezos is also correct. In announcing the management change, he included a reference to the famous line in his original 1997 letter to shareholders: "This is Day 1 for the Internet and, if we execute well, for Amazon.com," symbolizing the importance of having an underdog, startup mentality. With the founder moving upstairs and handing over the reins, it will be a new "Day 1" under a new boss.

Here is the good news for Amazon and its investors: The company has never been in a better position.

© Copyright 2021 Bloomberg News. All rights reserved.


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In the same breath Amazon announced its latest quarterly results, it said its founder Jeff Bezos will step down as CEO later this year. He will be succeeded by Andy Jassy, now head of Amazon Web Services, the company's cloud-computing powerhouse.
jeff bezos, andy jassy, amazon, cloud, computing, online, retailer, aws, ceo
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2021-32-02
Tuesday, 02 February 2021 09:32 PM
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