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Amazon Has Launched a Cost-Cutting Review Focused on Unprofitable Business Units (wsj.com) 47

Posted by msmash from the tussle-continues dept.
Amazon Chief Executive Andy Jassy is leading a cost-cutting review of the tech giant and paring back on businesses at the company that haven't been profitable,
Wall Street Journal reported Thursday, citing people familiar with the matter. From the report: The Seattle-based company, whose stock is down about 45% year to date, has been experiencing a slowdown in its core retail business as it tries to manage costs from its logistics network. Other technology companies have been making cuts to better navigate a potential recessionary environment. This week, Facebook parent Meta Platforms said it would cut more than 11,000 workers, or 13% of staff.

As part of the monthslong cost-cutting review, Amazon has told employees in certain unprofitable divisions to look for jobs elsewhere in the company, because the teams they were working on were being suspended or closed, some of the people said. Efforts to scrutinize expenses across a sprawling array of businesses have become common at the world's largest technology companies. Alphabet's Google has slowed the pace of hiring and scaled back support for a startup incubator, and Chief Executive Sundar Pichai has voiced concerns this year about employee productivity.
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Amazon Has Launched a Cost-Cutting Review Focused on Unprofitable Business Units More

Amazon Has Launched a Cost-Cutting Review Focused on Unprofitable Business Units

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  • Amazon has their policy of getting rid of at least 10% of the workforce annually, with the theory that the pruning is healthy. I wonder how well that concept could be applied to units and projects, cutting at least a tenth of them each year.

    • 10% sounds overly aggressive, and particularly stupid if every division is making money. If they limited to managerial bloat it would probably save them money, but even a division that's losing money can still have talented developers who made something that doesn't have a market for it.

      But a company as large as Amazon is going to collect some corporate detritus over time. As always the problem is accurately identifying it. Is a team underperforming because of the personnel doing the work or because of a

  • The angel is a 'comin... (Score:4, Interesting)

    by DesScorp ( 410532 ) on Thursday November 10, 2022 @12:44PM (#63041273) Journal

    Amazon is a company that famously never cared about profitability of units before (hell, the whole enterprise was unprofitable for years before Web Services finally started making them money). The fact that suddenly, they're trimming the fat in a massive way is just the latest sign that the whole tech industry... and enterprises that depend on them.... are in deep, deep trouble.

    The old days of "Don't worry about profit, keep doing new things and the money will come" is long gone.

    It's like we're in the Biblical Plagues days of tech, and the waters are metaphorically turning to blood.

    Better start making those bloody handprints on your doorways, Silicon Valley. When Apple starts announcing hardware cutbacks, that's when the Angle of Death pays his visit.

    • Re: (Score:2)

      by King_TJ ( 85913 )

      I don't know about all of that? If anything, they're just getting a wake-up call they needed, that they can't afford to keep spending on initiatives few people are interested in paying for.

      Meta is the perfect example. They went all-in on this VR thing almost nobody asked for, and it's tanking their whole company.

      The businesses depending on big tech should benefit from many of these cuts, if they're done intelligently -- and not just chopping talent that's capable of producing products or services customers

    • They always made money in the past, they just re-invested it back into growth initiatives. Amazon is completely different now. They employ over 1mn people globally today, and if you cant make $$ to pay their salary, you have to scale things back. This is not rocket science of finance.
    • Despite a healthy economy they're doing layoffs. Inflation is high but it's very clearly high because of corporate price gouging after decades of mergers eliminated competition.

      The baby boomers who have property stored and savings from better economic times before we went all in on austerity are gradually becoming less of a political force. Unions are forming. Wages are going up. Real wages. After decades of losing ground workers are gaining some.

      This calls for a reset. A return back to austerity an
      • Inflation is high because we've kept printing money (and even stepped it up to deal with the pandemic) despite overall production dropping (due to the afore mentioned pandemic, our response to it, and a few other global issues) which makes money less valuable.

        Corporate price gouging can't cause inflation. It can cause higher prices, but it can't make money worth any less than it is. The only way corporations could cause inflation is to collectively cut production. Less production with the same amount of

        • Corporate price gouging can't cause inflation. It can cause higher prices, but it can't make money worth any less than it is.

          That statement is self-contradictory. What defines the worth of money is how much stuff you can buy with it. If prices are higher, the money is worth less.

          There's no doubt that many prices have risen simply because consumers are now used to seeing price hikes. Producers don't price things based directly on what it costs them; they set prices based on what the market will bear. Legitimate shortages of a few items gave everyone else cover to hike their prices, too.

          • Re:It's the CEOs asserting control (Score:5, Insightful)

            by raftpeople ( 844215 ) on Thursday November 10, 2022 @03:01PM (#63041671)
            Inflation is worldwide and primarily driven by a disconnect in supply and demand which is primarily due to the pandemic. As we came out of the pandemic, demand increased substantially, but supply had been reduced during the pandemic and has not kept up, therefore prices go up. The war in Ukraine also contributes in areas like food/grain that are currently disrupted.
            • The supply chain issues have mostly cleared up. Cars and trucks have been manufactured like normal for months now and we've got plenty of toilet paper. Prices kept going up. Strangely enough prices went up nearly one to one with the rate of corporate profits going up.
        • The economy was growing at a faster rate than we were printing money. Do you know what happens to an economy that tries to grow without printing money? The economy contracts because the money supply can keep up. This idea that low interest rates caused inflation is a mirage used to trick you into ignoring the price gouging make a corporations are doing now that they don't have any competition.

          They're laughing at you behind closed doors.

      • Despite a healthy economy they're doing layoffs.

        The Economy is healthy. People have jobs. They produce goods and services for wages which they spend consuming goods and services.

        The Stock Market is overinflated. Money has been too cheap for a long time (interest rates were so low that it was profitable to borrow and invest in the stock market.) We are experiencing a stock market correction.

        These CEOs live on stock prices. Their job is paid in stock. They are paid to keep stock prices up -not to run an efficient business. They are panicking because

    • Amazon is a company that famously never cared about profitability of units before

      WTF are you talking about? They've been profitable for over 5 years. This all occurred approx the year before Jeff Bezos was crowned the richest man in the world. My family buys a lot of shit from Amazon and I've been watching prices carefully. About 5 years ago, the prices went up. Kudos to him for a brilliant strategy. He got many people hooked, including my wife. She still thinks Amazon is the cheapest despite WalMart, HomeDepot, Costco, or Target being cheaper for most things we buy. I've also no

  • Pretty sure this means Twitch is dead everyone.

    • Re: (Score:2)

      by EvilSS ( 557649 )
      I don't think they will kill it, it pretty much owns the market they are in. But I think they are in for a very cold winter. From what I hear they were already pressuring them to turn a damn profit even before all this started. I would not be shocked if they changed out the leadership over at Twitch though.
  • in the department in charge of frivolous lawsuits against NASA.

  • Yah, they need to be revamped. It's kind of unconscionable that they'll send a truck to deliver a shipment containing a $6 widget next day (just last week....). They have to still pay the shipping contractor so they're losing their ass on that $6 widget. Multiply that by thousands of times per day....

    • Re: (Score:2)

      by EvilSS ( 557649 )
      They have already made some quiet adjustments. I noticed a couple of months ago that new orders default to "prime day" shipping instead of fastest available. And they made it difficult to change it. It's multiple clicks and resets to prime day delivery at least once during the process, forcing you to re-select fastest shipping. Honestly I'm fine with it 99% of the time as it means fewer boxes as well. I wish Amazon had a plastic tote option where they deliver in a reusable plastic tote and pick up the empt

    • Re: (Score:1)

      by Anonymous Coward

      Not likely, whenever I order anything from Amazon there's at least 10 other deliveries on our street at the same time. It costs them nothing to add me to the list for a $6 item when they're already making countless deliveries meters from my home anyway.

  • They're going to start with Blue Origin, right?

    Because that's the biggest useless money pit Bezos is into right now.

    • They're going to start with Blue Origin, right? Because that's the biggest useless money pit Bezos is into right now.

      While Blue Origin may not be profitable, and may need it's own business reviews, it is also not part of Amazon..

    • Re: (Score:2)

      by suss ( 158993 )

      Well, that and the lord of the rings fanfic.

  • Instead of taking gobs of profits to expand and monopolize, how about turning some of that profit into dividends? You've won the "growth" game.. time to grow up.

  • They'll determine their best source of revenue is the knockoffs that get sold by vendors on the site. They'll save money by not making any more attempts to remove them from the site.

  • If an Amazon planner were to ask me... (Score:1, Interesting)

    by Anonymous Coward

    Here are some things they could do to climb back up that ladder:

    1: Restore functional 2-day delivery for Prime. The critical thing that made prime worthwhile was that. Now, you're lucky if whatever it is even ships in 2 days, much less is consigned to 2-day delivery service. A lot of the time, they punt deliveries to the US post office from the actual courier with some hellish hybrid delivery nonsense, and that extends it out even further while getting the item thrown on the ground next to the postbox inste

  • Imagine being a shareholder and seeing that rubbish.

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