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.


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

The good news Tuesday from 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

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 Cloud Computing - Fall 2020
The State of Cloud Computing - Fall 2020
Download this report to compare how cloud usage and spending patterns have changed in 2020, and how respondents think they'll evolve over the next two years.
2021 Outlook: Tackling Cloud Transformation Choices
Joao-Pierre S. Ruth, Senior Writer,  1/4/2021
Enterprise IT Leaders Face Two Paths to AI
Jessica Davis, Senior Editor, Enterprise Apps,  12/23/2020
10 IT Trends to Watch for in 2021
Cynthia Harvey, Freelance Journalist, InformationWeek,  12/22/2020
Register for InformationWeek Newsletters
Current Issue
2021 Top Enterprise IT Trends
We've identified the key trends that are poised to impact the IT landscape in 2021. Find out why they're important and how they will affect you.
White Papers
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