The entire globe right now seems to be in a recession as a direct consequence of the coronavirus pandemic. The pandemic which initially started off as being an epidemic and was limited to China only has now seemingly spread pretty much everywhere all over the world – as the global economy continues to suffer and tries to counter the devastating affects that have been laid down due to Covd-19.
As you then might have imagined, due to the fact that economies are shrinking – people are loosing their jobs as consumer demand too is on the fall. More and more people have lost their jobs and many businesses have gone into decline while others are facing even severe consequences as bankruptcy looms.
But the definition of recession and business decline that have been recognized just don’t seem to be extended to some entities – one of which is Amazon. Indeed, Amazon has continued to benefit from the Covd-19 situation as the company’s overall sales have been subject to a massive 40% year-over-year increase to that of $88.9 billion in its very first fiscal second quarter.
The online retail as well as cloud computing giant has gone on to prove many analysts wrong as many of them expected and predicted that the company would manage to bring in $81.24 billion in revenue as far as the latest quarter goes – which of course ended on the 30th of June. Needless to say, the giant has done much better than what analysts thought they would. Indeed the company’s profits have doubled year-over-year to $5.2 billion in its very latest quarter – this being especially notable due to the fact that it was said in April that it was actually projecting a loss of up to $1.5 billion in its second quarter due to the fact that the coronavirus pandemic would render operating costs to be at an exceptionally higher rate.
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Amazon’s chief financial officer in Brian Olsavsky has gone on to claim by explaining to analysts during an earnings call that the company has proceeded on to spend more than $4 billion on coronavirus-related expenses ever since the virus started to gain pace. Such an astounding amount of money includes the likes of cash spent on additional safety measures at the various warehouses as well as facilities that the company occupies, as well as in the purchase of personal equipment for the many workers that it has working under and also of course paying $500 million in “thank-you bonus” to both logistics as well as delivery workers.
However of course, as we see in hindsight, the massive increase in the number of consumers setting their eyes forth on buying goods via Amazon has gone on to make amends for all the extra expenses that have been recognized. The company’s chief financial officer continued by saying that the online grocery sales actually tripled year-over-year in the latest quarter, while Amazon’s Prime paid-subscription service led to more people “shopping more often” and also with “larger basket sizes.”
While many were expecting a comment, Olsavsky made absolutely no mention of Amazon’s chief in Jeff Bezos’ recent grilling at the hands of lawmakers on Wednesday during a congressional hearing with regards to antitrust and the power that tech giants such as Amazon, Apple, Google as well as Facebook have within their grasp. The analysts that were present during the earnings call also didn’t proceed on to address any of the possible ramifications that might make their way with regards to such hearings.
The executive belonging to Amazon went on to claim that via some measures taken – those of which include the reduction of marketing and travel related expenses, the company managed to accumulate the profits that it has for the quarter. In response to whether Amazon would be looking on to invest further due to the inflow of extra cash, Olsavsky said that not only does Amazon already have a lot of investments in place, but the company is pretty much always looking on to invest.
But it’s not all smooth sailing for Amazon – at least that’s not how the company might look at it as sales in its AWS (Amazon Web Services) cloud computing were subject to an only 29% year-on-year growth. While this figure of course does remain to be impressive, it also marks a decline in how fast AWS is actually growing. Indeed in just the last quarter, AWS’s revenue rose 33% year-on-year to $10.2 billion.
Olsavsky was also quick to identify the fact that while many entities have faced continued difficulties as a result of the pandemic, there also remain to be some winners. Indeed by claiming that sectors such as video conferencing, gaming and entertainment have all grown in recent times, the executive made it clear that it isn’t only Amazon that has seen a good quarter or indeed a good year as a whole.
All in all though, while we might be quick to appreciate the approach that Amazon has adopted in recent times to curb the numbers in such a manner that they remain to be on the side that the company wants them to be – we must also recognize the problem that has persisted for many years now : capitalism. Indeed it’s clearly seen by the latest turn of events with the prime example of course of Amazon itself that while the poor seem to be getting poorer, the rich seem to be getting even more richer.