After a mixed first quarter impacted by the COVID-19 pandemic, Amazon CEO Jeff Bezos on Thursday told Amazon shareowners to prepare to "take a seat" as the crisis eats into the company's profits. For the second quarter, Amazon said in its outlook, the company expects just about all of its operating income -- approximately $4 billion -- to go toward costs related to the pandemic.
Amazon's net income decreased to $2.5 billion in the first quarter, or $5.01 per diluted share, compared with net income of $3.6 billion, or $7.09 per diluted share, in first quarter 2019. Net sales increased 26 percent to $75.5 billion in the first quarter.
Analysts were looking for earnings of $6.25 per share on revenue of $73.61 billion.
Once again, Amazon Web Services grew at a faster rate than the rest of the company. The cloud computing segment brought in $10.2 billion in net sales in Q1, growing at 33 percent. That's slightly lower than Q4's 34 percent growth rate and slower than the 41 percent growth rate posted in Q1 2019[1].
In a lengthy statement, Bezos explained why the company could report losses in Q2:
"From online shopping to AWS to Prime Video and Fire TV, the current crisis is demonstrating the adaptability and durability of Amazon's business as never before, but it's also the hardest time we've ever faced. We are inspired by all the essential workers we see doing their jobs — nurses and doctors, grocery store cashiers, police officers, and our own extraordinary frontline employees. The service we provide has never been more critical, and the people doing the frontline work — our employees and all the contractors throughout our supply chain — are counting on us to keep them safe as they do that work.