- Amazon.com, Inc. (NASDAQ: AMZN) revealed that it is planning to spend all of its profit from the second quarter (about $4 billion) to respond to the coronavirus pandemic
On Thursday, Amazon.com, Inc. (NASDAQ: AMZN) announced its first-quarter earnings and the company revealed the impact of the COVID-19 pandemic on its operations. The company said that its earnings per share were $5.01 and revenue hit $75.45 billion. Of that revenue, Amazon Web Services (AWS) accounted for $10.22 billion. This is the first quarter that AWS revenue hit over $10 billion.
Amazon.com, Inc. (NASDAQ: AMZN) revealed that it is planning to spend all of its profit from the second quarter (about $4 billion) to respond to the coronavirus pandemic. This includes hundreds of millions of dollars on COVID-19 tests for company employees and ramping up the delivery network to get packages to customers.
“If you’re a shareowner in Amazon, you may want to take a seat, because we’re not thinking small. Under normal circumstances, in this coming Q2, we’d expect to make some $4 billion or more in operating profit. But these aren’t normal circumstances. Instead, we expect to spend the entirety of that $4 billion, and perhaps a bit more, on COVID-related expenses getting products to customers and keeping employees safe. This includes investments in personal protective equipment, enhanced cleaning of our facilities, less efficient process paths that better allow for effective social distancing, higher wages for hourly teams, and hundreds of millions to develop our own COVID-19 testing capabilities. There is a lot of uncertainty in the world right now, and the best investment we can make is in the safety and well-being of our hundreds of thousands of employees. I’m confident that our long-term oriented shareowners will understand and embrace our approach, and that in fact they would expect no less,” explained Amazon.com, Inc. (NASDAQ: AMZN) founder and CEO Jeff Bezos.
Bezos also said that the company is inspired by all the essential workers doing their jobs, including nurses and doctors, grocery store cashiers, police officers, and the company’s own frontline employees.
“The service we provide has never been more critical, and the people doing the frontline work — our employees and all the contractors throughout our supply chain — are counting on us to keep them safe as they do that work. We’re not going to let them down. Providing for customers and protecting employees as this crisis continues for more months is going to take skill, humility, invention, and money,” added Bezos.
In an interview with CNBC, Amazon.com, Inc. (NASDAQ: AMZN) chief financial officer Brian Olsavsky said that the company is planning to spend $1 billion on COVID-19 testing for the full year 2020. Plus Amazon set up a team of researchers, engineers, and program managers to work on building incremental testing capacity. For example, Amazon is launching a lab and started a pilot test of front-line employees.
“We’re not sure how far we will get in the relevant timeframe, but we think it’s worth trying, and we stand ready to share anything we learn,” added Amazon in the press release.
A portion of the $4 billion will also be used for providing higher wages for workers and for personal protective equipment (PPE). Plus there will be better cleaning protocols at the company’s facilities.
And for the second quarter, Amazon said it was expecting net sales to hit between $75 billion and $81 billion. And the operating loss is expected to have a range of $1.5 billion to an operating income of $1.5 billion based on the expectation of spending $4 billion on coronavirus-related costs. During the same quarter last year, Amazon saw an operating income of $3.1 billion.
During the pandemic, Amazon procured 100 million face masks and the company also hired 175,000 additional workers to help with the surge in demand. At the same time, warehouse workers have been pushing for safer conditions and higher benefits.
Essential products were given priority during the pandemic such as medical supplies and household groceries. Plus Amazon suspended over 10,000 sellers for violating policies against price gouging during the pandemic.
Disclosure: I own a small number of Amazon shares
