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Bezos to Shareholders: Take a Seat
Jeff Bezos has warned Amazon shareholders to prepare for a bumpy ride as the company prepares to spend billions on its coronavirus response. Much of the money is earmarked for improving workers’ conditions, a sign that Amazon wants to change its image.
Big Numbers in Q1
Many analysts were proven right when Amazon reported earnings on Thursday. The general consensus was that millions of Americans stuck at home would order even more stuff online, boosting Amazon’s sales.
Indeed, Amazon’s already massive sales jumped 25% to $75 billion dollars in the first quarter of 2020. However, profits didn’t meet expectations, as Amazon takes on bigger costs to adjust to the pandemic. Overall, the report didn’t stray too far from expectations.
For shareholders, the true kicker in Bezos’ presentation was his hint at what’s to come.
“Take a Seat” in Q2
‘If you’re a shareowner in Amazon, you may want to take a seat’ — Amazon reports earnings, plans to spend all Q2 profits on coronavirus response. https://t.co/GkXoHhs6vZ
— CNBC (@CNBC) April 30, 2020
In the shareholder presentation, the company’s CEO was more interested in the path ahead than the first quarter’s performance. Regarding Q2, Jeff Bezos had this to say:
“If you’re a shareowner in Amazon, you may want to take a seat, because we’re not thinking small,” said the world’s richest man in a press conference “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.”
Amazon still expects sales to grow a whopping 20% this quarter, but rather than $4 billion in profits, the firm doesn’t expect to make any money at all. This naturally came as a shock to investors, and the stock price fell 5% following the news.
The company will spend extra money on increased pay for its employees and procuring over 100 million face masks to keep them safe. These moves stand in sharp contrast to Amazon’s accusations of putting profits before workplace well-being.
Amazon: A Jungle for Employees
Amazon is now making a multi-billion-dollar commitment to protect its workers during the pandemic, but its reputation as a workplace environment has historically been far worse.
Amazon’s dominance is thanks to a level of service other companies simply can’t beat. Often, packages arrive less than 24 hours after ordering them, seemingly by magic. However, the price paid for such service is an army of distribution workers moving at break-neck pace.
In 2019, the company had a worker injury rate three times the national industry average. Last November, a report emerged that Amazon didn’t let employees leave a distribution center during a gas leak, telling them they’d need to use personal time if they wanted to leave the building.
The coronavirus response has seen little change in quality of life for employees.
As reported by Wired, one anonymous worker described Amazon’s pandemic response:
“A couple of weeks ago, they started doing superficial stuff for the coronavirus. They put tape on the ground by the time clocks for social distancing, and they removed some of the time clocks. But then they hired more people, which made the crowding worse in some areas.”
The company’s spending on employee safety likely represents not only an investment in worker well-being, but a way to protect its brand from a growing reputation as an uncontrollable monopolist and bad place to work.
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1 Comment
POS needs a beatdown.