Amazon beats 2020 third quarter sales forecasts, but admits it will struggle to meet the demand it expects at Christmas: Amazon exceeded all expectations with its results for the third quarter of 2020, in which it reported revenues of 96.1 billion dollars (82.304 million euros) and forecast a four-quarter that will also break records and expects to exceed 100.000 million quarterly turnover for the first time in its history.
However, the company admitted that it will be "difficult" to meet the demand it expects during the Christmas period. "We are already quite tight. It will be advantageous for the customer and for companies that this year orders are placed sooner," warned the Chief Financial Officer of the e-commerce giant, Brian Olsavsky.
The company is confident that its external collaborators in tasks such as home delivery will help them respond to the record demand they expect for the last quarter of the year, in which the strongest period annually will be combined with the increase in e-commerce due to the pandemic.
"We know that their capacity is also tight, as is ours. It has been a difficult year, and in the last quarter everything increases. We are adding capacity and using it simultaneously," added Olsavsky, who explained that they expect spending of 4,000 million dollars (3,424 million euros) related to measures against COVID-19, after the 2,500 million (2,140 million euros) they spent in the third quarter.
These are the main data of the third quarter of Amazon, whose shares fell by 1% after the close of the market on the estimate of lower operating profits for the next quarter that the company made, weighed down by extraordinary expenses by the pandemic. However, Jeff Bezos ' company is racking up a 70% profit this year.
- Profit per share. 12.37 dollars (10.58) against the 7.41 (6.34 euros) expected by analysts.
- Revenues: 96,100 million dollars (82,304 million euros) against the 92,710 million (79,365 million euros) expected.
- Revenue from Amazon Web Services( AWS): 11,600 million dollars (9,929 million euros) against the 11,610 expected by analysts (9,937 million euros).
Amazon sales grew by 37% this third quarter, driven by increased demand for the pandemic. The operating profit has tripled to the 6,330 million dollars (5,418 million euros).
Amazon beats 2020 third quarter sales forecasts
CEO Jeff Bezos noted in a statement that they have reached a record number of customers. "We have seen more customers than ever buying soon for their Christmas gifts, which shows that it is going to be an unprecedented Christmas campaign," he said.
An analyst says Amazon's profits could be even higher in 2021 than in 2020 because the pandemic has "permanently influenced" e-commerce sales
Amazon manages a revenue forecast for the fourth quarter driven by Christmas sales of between 112.000 and 121.000 million dollars (between 95.870 and 103.500 million euros), above analysts ' forecasts.
However, the giant of e-commerce admitted that their benefits will be impacted in the last quarter for expenses related to the pandemic, which is estimated at 4,000 million dollars ($3.424 billion), so that its operating profit for the last period of the year will fall to be between 1,000 million (856 million euros) and the 4,500 million (holding 3,852 million euros), below the 5.810 million dollars ($4.973 million euros) estimates by Wall Street analysts.
The business of servers and services to companies, Amazon Web Services, improved by 29% its sales to 11,600 million dollars (9,929 million euros), in line with forecasts and the company's other businesses, including advertising, improved by 51% to a turnover of 5,400 million (4,624 million euros). Physical sales fell 10%.
The e-commerce giant increased its workforce by 50% over the previous year, with more than 1.13 million workers, overcoming the million barrier for the first time in its history.
Amazon beats 2020 third quarter sales forecasts
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ByteDance quietly leased "massive" US data centers, a sign that it may have planned to move TikTok operations there
While TikTok's parent company, Bytedance, was negotiating an agreement to move the video app's global operations to the U.S., The China-based company set about renting space for data storage in the U.S. country.
ByteDance was behind 3 separate transactions in the first half of 2020 to lease 53 megawatts of space in a data center in Northern Virginia, a source commented to Business Insider. This person, whose identity was verified by Business Insider, spoke on condition of anonymity because he was not authorized to address the issue.
Analysts said that this amount of space —facilities that could consume more energy annually than 25,000 homes— could amount to hundreds of thousands of servers for cloud use and data processing.
According to this person, the data center agreement —in addition to a lease of another 9 megawatts in 2019— makes TikTok's parent company one of the 10 largest tenants in Northern Virginia, a region dubbed Data Center Alley for being home to the largest data center market in the country, including among its occupants enterprise software giants Amazon Web Services and Oracle, which is one of the companies that could acquire part of TikTok.
Analysts told Business Insider that a lease of a data center of this size seemed to indicate the intention of the China-based company to establish a database on U.S. soil. This investment comes even as TikTok's future in the US remains uncertain.
But by leasing space to keep user data there, ByteDance adheres to the US government's data sovereignty requirements, as Jennifer Cooke, an analyst at IDC, pointed out to Business Insider. That forces information about U.S. citizens to be stored in the country.
The proposal, which has been underway for months, would split TikTok's global business into a new US-based company, in which Oracle, Walmart and US investors would have significant stakes. However, there is still no agreement on whether the transaction would give the majority of the ownership to US investors or whether it would allow ByteDance to retain its majority ownership.
As Election Day approaches, the Trump administration's battle with TikTok has been overshadowed by the president's re-election campaign. A federal judge has scheduled a hearing for November 4, the day after the presidential election, to decide whether to block the government's planned ban, which would take effect on November 12, unless the court decides to ban or delay the order.
If the ban is enforced, the U.S. government would dismantle TikTok's operations in the country.
The Trump administration has for months wanted to ban the video app on national territory due to concern that the Chinese government could access the data of American users of TikTok. However, TikTok continues to run smoothly and has maintained its popularity among users.
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