"Team Integration and Employee Layoffs"... Poor Performance Expected in Q4 as Well
[Asia Economy Reporter Yujin Cho] Amazon has begun restructuring by consolidating some teams, including the Alexa division, and laying off employees. The company significantly expanded during the COVID-19 pandemic period with soaring performance, but the expansion has backfired amid high inflation and concerns over an economic downturn.
On the 16th (local time), Dave Limp, Senior Vice President of Amazon Devices & Services, announced in a company blog post, "After careful review, we have decided to consolidate some teams and programs within the Devices and Services division."
He added, "We began notifying affected employees yesterday and will assist them in finding new roles." He also wrote, "It is painful to share this news and to lose talented employees as a result of this decision."
Vice President Limp explained, "Considering the current macroeconomic environment, we have reprioritized our business and determined that certain positions are no longer necessary." This acknowledges that the excess workforce resulting from expansion during the pandemic boom and the subsequent decline in online demand is directly impacting profitability.
The company did not disclose detailed restructuring plans or the number of employees laid off. Major foreign media reported that the teams being consolidated include the Devices division, which develops the AI voice assistant Alexa, as well as retail and human resources departments.
The New York Times (NYT) previously reported that Amazon is planning layoffs affecting 10,000 employees this week. Although the total number of layoffs may fluctuate, the NYT stated that this reduction will be the largest in the company's history.
Amazon significantly expanded its core retail business during the COVID-19 pandemic with soaring performance, but the shift to tightening and ongoing recession concerns have caused the expansion to backfire. According to the Wall Street Journal (WSJ), Amazon hired approximately 800,000 additional warehouse workers from the end of 2019 to the end of 2021 during the pandemic period.
Amazon posted a net loss of $3.8 billion (about 4.8 trillion KRW) in the first quarter of this year, marking its first quarterly loss in seven years, and shows no signs of recovery. Fourth-quarter sales are expected to fall significantly short of market expectations ($155.15 billion), ranging between $140 billion and $148 billion.
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