Amazon CEO Andy Jassy sent his annual letter to investors, in line with the tradition started by Jeff Bezos in 1997. Unsurprisingly, it highlights the resilience of the e-commerce giant in a period of difficult economic recession for the tech sector, and ensures that it will come out stronger.
See in the long term
Jassy came to lead Amazon in 2021 when the company was at its peak, with outsized performance resulting from the Covid-19 pandemic. 2022 has been quite different, and arguably represents one of the most complicated periods in the company’s history. Its shares have fallen nearly 50% over the year. While they have since increased, they are still down about 35% from 2021.
Asked about this by CNBC, Andy Jassy says he’s not really interested in his company’s stock market listing. “ Over a period of time, it may be up or down, but what really matters is what you do for your customers over a long period of time. “, he said. Besides, the CEO’s many efforts to cut Amazon’s spending were welcomed by investors.
He did not hesitate to end projects like Amazon Care, to close Amazon Go stores, and above all, to announce several waves of massive layoffs leading to the departure of around 27,000 of his employees. ” I’m convinced that we will emerge from this difficult macroeconomic period in a stronger position than when we entered it “, assures Jassy in his letter, the second since his arrival as CEO.
Amazon’s paid investments
He also took the opportunity to highlight several investments that he considers significant in the long term, including Buy with Prime, a tool allowing third-party merchants to use the Amazon Prime service for products listed on their own site. He allowed “ increase the conversion rate of buyers on third-party sites by 25% on average writes Jassy.
The CEO also commends Amazon for its Kuiper satellite constellation project, which aims to bring high-speed Internet to the most remote areas of the world. ” We believe that Kuiper represents a very significant potential opportunity for Amazon. It has several similarities to Amazon Web Services, in that it is capital-intensive upfront, but has a large potential consumer, business, and government customer base, revenue potential, and high operating profits, and a relatively small number of companies with the technical and inventive skills, as well as the investment hypothesis necessary to tackle them he reports.
The leader also congratulates Amazon for its progress in the health sector. In addition to completing the $4 billion takeover of One Medical, the company now offers U.S. Amazon Prime subscribers unlimited access to commonly prescribed generic drugs.
Finally, CEO Highlights Company’s Investments in Generative AI, a hot topic in Silicon Valley right now, through technology for cloud computing customers, as well as a marketplace for AI tools from other companies. ” I could write a whole letter about Extended Language Models and Generative AI, as I think they will be truly transformative, but I’ll leave that for a future letter. Let’s just say they’re going to be big business for customers, our shareholders, and Amazon. “, he announces.
Cost rationalization pays off, says CEO
Despite these efforts, Amazon faces slowing growth in its two main businesses, retail and cloud computing. ” Despite growing 29% year-over-year in 2022 based on $62 billion in revenue, AWS faces near-term headwinds as companies are more cautious in their expenses due to the current difficult macroeconomic conditions “, explains Andy Jassy.
The CEO nevertheless remains confident for the future. ” We still have a lot of growth ahead of us. The fact that we’ve been able to significantly streamline our costs while preserving long-term strategic investments that we believe can significantly change the Amazon customer experience in the long run, I think we have a lot of reasons to hope “, he confided to CNBC.
Ahead of the letter, Amazon filed its annual report. Andy Jassy collected $1.3 million in 2022. That’s a steep drop from 2021. He then received an equity award worth more than $200 million linked to his promotion to CEO, with the shares vesting over a 10-year period, allowing him to record revenue of $212 million. of dollars.
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