Amazon's Loss Smaller In 4Q, But Jobs To Be Cut - InformationWeek

InformationWeek is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them.Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

IoT
IoT
News

Amazon's Loss Smaller In 4Q, But Jobs To Be Cut

The good news Tuesday from Amazon.com Inc.'s year-end earnings announcement is that the company finally divulged a long-awaited target date for achieving profitability, with company execs predicting they'll be the black in the fourth quarter of this year. The bad news is that it apparently will take sizable layoffs to make this possible.

Amid a relatively upbeat earnings report highlighted by growing sales and declining losses, Amazon execs said they're cutting 1,300 jobs, or 15% of the company's workforce, by closing distribution and customer-service centers in McDonough, Ga., and Seattle, respectively, and operating the Seattle distribution center on a seasonal basis. The layoffs are part of a restructuring believed necessary to achieve profitability. "It's always difficult and painful, but it was clearly the right decision," CEO Jeff Bezos says.

During a conference call, Bezos told analysts this was the first time he felt comfortable offering a profitability projection, but he was careful not to make any assurances. "We know these types of goals are never guaranteed."

ABN-Amro analyst Kevin Silverman isn't surprised that Amazon is taking such drastic steps to turn a profit, and he says the layoffs are a sound business decision for a bloated company. "They've recognized that the capacity they've taken on is too big," he says. "It's a sign of good management." Silverman says the company's expectation that sales would grow 20% to 30% in 2001, down from previous projections of 40% to 45%, shows it's recognizing the reality of consumers' online buying habits. "It means you'll have a company that's half as large as they thought they'd be in four years."

For the fourth quarter ended Dec. 31, Amazon reported a pro forma loss, which excludes nonoperating losses, of $90.4 million, or 25 cents a share, on revenue of $972 million. That compares with a pro forma loss of $184.9 million, or 55 cents a share, on revenue of $676 million for the same quarter last year. Pro forma operating margin for the quarter improved to negative 6% from negative 26% last year. For the year, Amazon's pro forma loss was $417.2 million, or $1.19 a share, on revenue of $2.76 billion, compared with a pro forma loss of $389.8 million, $1.19, on revenue of $1.64 billion for 1999.

For more on Amazon, log on to www.informationweek.com/811/amazon.htm

We welcome your comments on this topic on our social media channels, or [contact us directly] with questions about the site.
Comment  | 
Print  | 
More Insights
The State of IT & Cybersecurity Operations 2020
The State of IT & Cybersecurity Operations 2020
Download this report from InformationWeek, in partnership with Dark Reading, to learn more about how today's IT operations teams work with cybersecurity operations, what technologies they are using, and how they communicate and share responsibility--or create risk by failing to do so. Get it now!
Slideshows
IT Careers: 10 Industries with Job Openings Right Now
Cynthia Harvey, Freelance Journalist, InformationWeek,  5/27/2020
Commentary
How 5G Rollout May Benefit Businesses More than Consumers
Joao-Pierre S. Ruth, Senior Writer,  5/21/2020
News
IT Leadership in Education: Getting Online School Right
Jessica Davis, Senior Editor, Enterprise Apps,  5/20/2020
Register for InformationWeek Newsletters
Video
Current Issue
Key to Cloud Success: The Right Management
This IT Trend highlights some of the steps IT teams can take to keep their cloud environments running in a safe, efficient manner.
White Papers
Slideshows
Twitter Feed
Sponsored Live Streaming Video
Everything You've Been Told About Mobility Is Wrong
Attend this video symposium with Sean Wisdom, Global Director of Mobility Solutions, and learn about how you can harness powerful new products to mobilize your business potential.
Sponsored Video
Flash Poll