Monday, May 4, 2020

Amazon budgets $4 billion to combat coronavirus

May 2, 2020 - " Inc. topped $75 billion in sales in the first quarter as COVID-19 swept across the globe, but profit declined and the company said Thursday that it might lose money in the current period.... For the second quarter, the company said it could report operating losses of up to $1.5 billion.... Analysts had expected more than $4 billion in operating profit in the second quarter, according to FactSet, but Chief Executive Jeff Bezos said he expects to spend that and possibly more.

"The jump in expenses will come from spending 'hundreds of millions of dollars' developing testing capabilities for all of its employees for COVID-19, starting with front-line workers; personal protective equipment for the company’s hundreds of thousands of employees; 'enhanced cleaning' of its facilities; and 'higher wages for hourly teams.'

"Amazon, for example, has procured 100 million face masks to be worn by 'all associates, drivers, and support staff in our operations network.' It has purchased more than 1,000 thermal cameras and 31,000 thermometers, which are being used to conduct mandatory daily temperature checks for employees and support staff throughout its operations sites and Whole Foods Market stores. And it has assembled a team including research scientists, program managers, procurement specialists and software engineers to build incremental testing capacity.....

"Bezos said in Thursday’s announcement.... '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'....

"Underlying strong demand for Amazon’s operations in online shopping, cloud computing and streaming video, the company went on an unprecedented hiring binge since mid-March in seeking 175,000 additional workers — most of them at fulfillment centers and delivery services. Those positions have been filled, including 95,000 in April....

"'In this stay-at-home, social-distancing economy, Amazon is in a relatively good positioning with retail delivery, streaming and cloud services,' Christian Magoon, chief executive of Amplify ETFs and manager of the Amplify Online Retail ETF, told MarketWatch. 'If there is a downside, it’s a downturn in retail, companies attempting to renegotiate AWS contracts to save money, and political risk around the [federal government’s antitrust] investigation into Amazon, and ongoing friction between President Trump and [Amazon CEO] Jeff Bezos.'"

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