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Amazon sales climb higher as COVID lockdown continues to provide a lift

Amazon pulls in $108.5 billion in the first quarter, topping both its own and Wall Street's expectations.

Amazon Shopping

Amazon posted record profits again in the first quarter of 2021.

James Martin/CNET

There was no dramatic announcement in Amazon's earnings report Thursday that could match the previous quarter's news. In February, CEO Jeff Bezos said he'd step down at midyear and that Amazon Web Services CEO Andy Jassy would take on his role. In the first quarter, Amazon got back to what's been a recurring theme: making tons of money as more consumers embrace online shopping not as a luxury but a way of life in the midst of a pandemic.

Amazon reported that net income rose to $8.1 billion, or $15.79 a share, up sharply from $2.5 billion, or $5.01 a share, a year ago. Net sales climbed 44%, to $108.5 billion, from $75.5 billion last year. On average, analysts had predicted earnings of $9.54 per share and about $104 billion in revenues, according to Yahoo Finance. Amazon had previously forecast net sales of between $100 billion and $106 billion.

Amazon is just the latest tech company to post blow-out numbers -- Apple and Facebook turned heads with their results Wednesday -- having benefited from the coronavirus-fueled lockdown that's only now starting to subside in the US. Amazon in particular benefited as more people got comfortable getting everything from diapers to groceries delivered to them. 

While Amazon's North America business saw operating income nearly triple to $3.45 billion, its AWS cloud business continues to be the real money maker, pulling in $4.16 billion in operating income in the period. 

Over the last 12 months, Amazon has enjoyed a smooth run since overcoming logistical challenges that hit hardest at the end of the first quarter of 2020. Even though sales still grew that quarter, Bezos warned investors that the company might spend $4 billion on dealing with the pandemic in the following quarter, eating up its projected profits. That turned out not to be the case, as Amazon posted record second-quarter profit even after its big spend on coronavirus-related needs.

For the upcoming second quarter, Amazon projected sales to fall between $110 billion and $116 billion, with operating income to land between $4.5 billion and $8 billion. In a call with reporters, Amazon Chief Financial Officer Brian Olsavsky said Prime Day will occur in June this year, moving back from its 2020 fall slot. Speaking on a call with financial analysts, Olsavsky said Prime Day's traditional month of July is typically a big vacation time, which is one of the reasons why Amazon is "testing it out" in June.

The mountains of cash Amazon generates draw attention, and regulators have their eyes on the company. Amazon faces possible federal antitrust action and a labor investigation. The tech giant also avoided unionization in the first quarter of this year, as workers at a Bessemer, Alabama, warehouse voted to reject union representation. Organizing efforts continue, and Amazon is under continued scrutiny from regulators, but the company's US workforce remains un-unionized.

On Wednesday, the company announced a wave of pay raises for its workers. Hourly wage increases will happen earlier this year, lifting hourly pay between 50 cents and $3 over May and June. Amazon has said the raises will cost the company about $1 billion. Olsavsky told reporters that the increased wages make sense as more sectors of the economy open up. Many of the employees Amazon gained during the pandemic may have come from those sectors, and the company wants to remain competitive as more jobs become available, he said.

In his annual letter to shareholders, Bezos said he wants Amazon to become the best employer on Earth. The company has tracked efforts to reduce musculoskeletal disorders in its warehouses, and says its prevention and early management efforts are already reducing the injuries, which include things like sprains and strains. The company is also expanding its injury prevention training with the goal of cutting what it calls "recordable incident rates" in half by 2025.

Olsavsky didn't give a number when asked if there was a specific budget tied to the broader effort to become the world's best place to work, and emphasized that Amazon is already proud of the workplace it offers employees. 

"There's still always work to be done, especially on the safety side," he said.

Update, 4:08 p.m.: The earnings per share figures have been changed to reflect the diluted earnings per share.