Amazon Lays Off More People

Andy Jassy, CEO of Amazon
AMZN
is acting fast. In addition to dismissing 27,000 of its retail associates, the company announced further cut-backs in its very profitable AWS Web service. This division, which grew 20% year over year in the last quarter also had a 27% growth in the previous quarter.

It is evident that customers cut their spending in the latest quarter, and management is concerned about a macroeconomic downturn. It means that Andy Jassy and Adam Selipsky, CEO of Web services are looking at the number of employees and reducing their workforce in order to report consistent profitability. While many of the associates may find other employment in their specialized technical field, it does denude Amazon of their special contribution to success.

Amazon is realistic in their expectations. The first couple of quarters of 2023 will see a “headwind” that will impact AWS Web services. The Information points to Google and Microsoft
MSFT
who have also laid off employees in their cloud divisions since their managements read the same economic forecast.

At the same time, Amazon’s management shut down the Halo division. This group worked on health and fitness devices. Amazon has stopped selling Halo hardware on its website and will stop supporting the products as of July 31, 2023. The company has offered to issue refunds for recent purchases for the three products now available. The three products are the View and Band fitness trackers, as well as the Rise bedside sleep tracker.

These reductions in overall employment are significant enough that it also led to cutbacks in the human resources department.

POSTSCRIPT: One hopes that management of Amazon has the finesse to keep the remaining employees happy. It is obvious that Andy Jassy’s predecessor, Jeff Bezos, went on a hiring binge that brought many talented people to Amazon. Some are now leaving, having developed a heritage of innovative products and services. The creativity of the Amazon team was impressive, and one hoped that in future years more creative products will be introduced to customers.

EARNINGS POSTSCRIPT: Late Thursday afternoon April 27. 2023 Amazon announced first quarter sales and earnings. Revenues were above expectations. Net sales increased 9% to $127.4 billion, compared to 116.4 billion in last years first quarter. Street estimate was $127.3 billion. Net income was $3.2 billion compared to a loss of $3.8 billion in the first quarter of 1922. In other words, a gain of $3.1 billion per fully diluted shares, compared to a loss of $0.38 per fully diluted shares last year.