Amazon

  • Amazon, the   e-commerce retail megalith, posted its largest quarterly revenue of all time,   smashing Wall Street estimates on both the top and bottom lines thanks to a   record-breaking holiday season.

  • Fourth quarter revenue   rose 44% to $125.56 billion. Operating income increased 92% to $6.9 billion,   and net income jumped 118% to $7.2 billion, or $14.09 per diluted share. The   expenses related to shipping goods to consumers rose 67% from a year earlier   to $21.5 billion in Q4, putting pressure on margins but this was made up for   in volumes. The company hired 175,000 new full-time and part-time employees   in the period to service the spike in demand, more than triple the personnel   it hired in the year-ago period. Free Cash flows, cash generated after   investments, improved by 20% year-on-year to $31 billion.

  • Sales fell 8% in   Amazon’s physical store unit, which includes Whole Foods, as consumers opted   to shop online for groceries. Amazon’s cloud-computing unit, Amazon Web Services (AWS), saw its   revenue climb 28% to $12.7 billion. AWS continued to make up a major portion   of Amazon’s profit. Operating income for the division increased 37% from a   year earlier to $3.56 billion. This means 52% of Amazons total operating   income was attributed to web service, down from about two-thirds in the same   period a year ago. Advertising which comprises most of the "other"   category generated $7.9 billion in the quarter, up 64% year   over year.

  • For the full year, Net   sales increased 38% to $386.1 billion. Operating income rose 58% to $22.9 billion, and Net income for the full year   increased 83.6% to $21.3 billion, or $41.83 per diluted share. Amazon ended   the period with $42 billion in cash and cash equivalents and another $42   billion in marketable securities.

  • The company also announced that founder Jeff Bezos would be stepping down as CEO and will be replaced by Amazon Web Services CEO Andy Jassy. Bezos will become chairman, and will focus on new products and early initiatives as well as the Day One Fund, the Bezos Earth Fund, The Washington Post and his space exploration venture Blue Origin.

  • Amazon estimates coronavirus-related costs to fall from to about $2 billion in the first quarter of fiscal 2021, attributing it to an expected drop in volumes of approximately 25% from Q4 2020 to Q1 2021. The company also paid a one-time $300 bonus to front-line employees in the period.Amazon has guided for first quarter sales of between $100 billion and $106 billion, which is a slowdown from Q4 2020, but is still an increase of between 33% and 40% from the year-ago period. Operating income is forecast to be between $3 billion and $6.5 billion in the fiscal first quarter.Last year Citi research suggested Amazon will make up 43% of the US e-commerce market by 2022 (compared with 38% in 2019), and almost 7% of all US retail sales by 2022 (from 4% in 2019). Amazon is an exceptionally well run business, which we would buy into weakness, and which we hold in the Cratos BCI Worldwide Flexible fund.

Amazon