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Good morning.
If you were designing a company from scratch to capitalize on COVID 19, what would it look like?
No need to look further than your front doorstep for the answer: Amazon. The company jumped to the number two spot on the 2020 Fortune 500 list, out this morning here. And that was based on its performance last year, before the pandemic hit. Since then, while others were shedding tens of millions of workers in response to the crisis, Amazon added 175,000 frontline workers to meet the surge of business.
Amazon’s ascent up the Fortune 500 list has been breathtaking. It joined in 2002 at number 492 and has seen its market value rise more than 22,000% since then. With revenues of $280 billion, it’s still just a little over half the size of rival Walmart, which earned the top spot on the 500 again with $524 billion in revenue. There’s little doubt those two will duke it out for retail dominance over the next few years (and also little doubt that one-time number one, and last year’s number two–Exxon Mobil–will continue its descent.)
Amazon has its troubles. A rising chorus is calling for a new look at the company’s practices under antitrust laws. Scrutiny of its warehouse safety record also is growing. As I reported last week, more of the 500 CEOs choose Walmart’s McMillon than Amazon’s Bezos as their most admired peer. But when asked where they would invest their money, the CEOs overwhelmingly pick Amazon–along with all the other investors who have driven its market cap to a remarkable $1.2 trillion, more than triple Walmart’s $357 billion.
You can read an excerpt from Brian Dumaine’s new book on Amazon’s ascent here. Other 500 Coverage out this morning includes deep dives on Intel, Honeywell and Uber; interviews with the CEOs of Cisco, Qualcomm and Best Buy; and the real story of what happened to toilet paper during the crisis.
And data buffs will want to spend some time with this history of the Fortune 500, prepared with the help of our Fortune 500 analytics partner, Qlik.
More news below.
Alan Murray
@alansmurray
alan.murray@fortune.com
TOP NEWS
Japan recession
Japan is now in a recession, and it's only going to get worse. The recession comes after Q1 figures showed an annualized 3.4% drop in GDP—better than the expected 4.5% drop, but nowhere near the dreadful 21.5% contraction that analysts expect to manifest in the current quarter. Japanese stimulus measures already total more than 20% of GDP, and the government is now under pressure to deliver more. Fortune
SoftBank and T-Mobile
SoftBank is reportedly looking to offload a big part of its stake in T-Mobile U.S., with the likely buyer being controlling shareholder Deutsche Telekom. SoftBank (which is losing Alibaba co-founder Jack Ma as a board member) needs to raise cash right now due to big investment losses. Wall Street Journal
Powell warning
The U.S.'s economic downturn could last until late 2021, Fed Chair Jerome Powell has warned. Powell also said the U.S. economy could "easily" contract by as much as 30%, and unemployment could peak at 25%, during the pandemic. He also pointed out that the lowest-paid Americans, women in particular, are being hit worst by the downturn. BBC
J.C. Penney
J.C. Penney has become the latest retailer to file for Chapter 11 bankruptcy protection in the midst of the coronavirus pandemic. The company says it will close an unspecified number of its 850 stores. The lender-supported bankruptcy will erase several billion dollars of J.C. Penney's debt, which stood at $3.6 billion at the end of February. The company has received $900 million in debtor-in-possession financing to keep it going through the bankruptcy process. Fortune
AROUND THE WATER COOLER
Social distancing
Harvard disease researchers say we may need to be intermittently social distancing through 2022. Due to the fact that the world already has almost 5 million confirmed COVID-19 cases, the researchers say it's increasingly unlikely that one strict bout of social distancing, followed by intensive contact-tracing, will be enough to eradicate the virus. A seasonal spread around the world, as with flu, is more likely. Fortune
German cars
The German auto sector apparently no longer has quite as much influence over the country's political class as it once did. Weakened by the Dieselgate pollution scandal and now in dire straits thanks to the coronavirus, the likes of BMW and Daimler are having trouble getting Angela Merkel's government to boost car sales through targeted stimulus measures, as happened in the financial crisis. Financial Times
Buffett and Goldman
Warren Buffett's Berkshire Hathaway offloaded most of its stake in Goldman Sachs in Q1, according to a regulatory filing. Unlike Berkshire's recent, dramatic selloff of airline stocks, this doesn't seem to be a generalized exit from the banking industry; it remains a majority shareholder in American Express, Bank of America, PNC Financial Services and Wells Fargo. CNN
Brexit suggestion
Former Theresa May adviser Raoul Ruparel has a suggestion for breaking the impasse between the U.K. and the EU, regarding what will happen when the Brexit transition period runs out at the end of this year. He proposes an extension to the transition period, but not to hold more negotiations—rather, to give time to implement what gets agreed this year (and again, not much has been agreed yet). Politico
This edition of CEO Daily was edited by David Meyer.