In a “surprise move”, Amazon announced last week that its founder Jeff Bezos is stepping down as CEO, says James Titcomb in The Daily Telegraph. Bezos will move to the role of executive chairman in the third quarter of this year, allowing him “more time for interests in other areas”. Andy Jassy, the current head of Amazon’s successful cloud-computing division, will replace Bezos as CEO. The announcement came as the company posted record sales, surpassing $100bn in a single quarter for the first time as it benefited from lockdowns that have “pummelled physical retailers”.
Bezos won’t disappear, say Nils Pratley in The Guardian. As chairman he “will still run the board” and have “freedom to roam wherever he wishes”. If Bezos and Jassy disagree, “everybody knows who will prevail” given that Bezos “owns 10% of the shares”. The move may be a largely cosmetic device to enable him to “avoid the next grilling in front of US lawmakers” over Amazon’s treatment of small businesses, workers or anti-trust issues. With Bezos still making the big corporate decisions “real change at Amazon may be hard to detect”.
The “everything store”
Investors should certainly not expect the business model of the so-called “everything store” to change radically under the new management team, says Lex in the Financial Times. Not only will Bezos still “oversee the business” in his new role, even after his departure, but his replacement is also hardly someone who will look to shake things up. Jassy “has been with Amazon for 24 years, joining straight out of Harvard Business School” and is both a “loyal employee and successful business developer”.
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Still, things are unlikely to remain completely the same, says Jim Armitage in the Evening Standard. The move “could signal a shift in the group’s focus towards more business-to-business operations”. Jassy has successfully run Amazon Web Services (AWS), which now “powers around 45% of the world’s cloud-hosted websites”. AWS was already “the biggest profit generator at Amazon before lockdown”, but with the restrictions driving businesses “to digitise their systems and power them remotely through the cloud”, it has “grown massively since”. There have even been rumours that AWS could be split from the company, though Jassy’s elevation makes this unlikely.
AWS has been “one of Amazon’s jewels”, booking “more than half of its operating profit despite accounting for just 12% of total sales”, says Jennifer Saba on Breakingviews. But it must keep growing fast as the rest of the business faces increased pressure. Operating costs shot up by 42% in the fourth quarter “because costs associated with worldwide shipping rose about two-thirds”. It expects sales volumes to drop by 25% this quarter compared with the previous three months as vaccines and the end of lockdown create more choice about where to buy goods.
Matthew graduated from the University of Durham in 2004; he then gained an MSc, followed by a PhD at the London School of Economics.
He has previously written for a wide range of publications, including the Guardian and the Economist, and also helped to run a newsletter on terrorism. He has spent time at Lehman Brothers, Citigroup and the consultancy Lombard Street Research.
Matthew is the author of Superinvestors: Lessons from the greatest investors in history, published by Harriman House, which has been translated into several languages. His second book, Investing Explained: The Accessible Guide to Building an Investment Portfolio, is published by Kogan Page.
As senior writer, he writes the shares and politics & economics pages, as well as weekly Blowing It and Great Frauds in History columns He also writes a fortnightly reviews page and trading tips, as well as regular cover stories and multi-page investment focus features.
Follow Matthew on Twitter: @DrMatthewPartri
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