While Amazon plans to embark on the largest layoffs in history, the company has shown no regrets over years of explosive growth and overhiring.
Amazon CEO Andy Jassy announced in November that the company would begin layoffs in several departments and said the layoffs could continue until 2023. Jassy’s announcement came days after The New York Times reported that the company planned to cut about 10,000 jobs in departments including equipment, retail and human resources.
On Wednesday, Jassy confirmed the mass layoffs at The New York Times’ “Deals” summit, citing economic uncertainty ahead as the company had to cut spending. “We just thought we needed to cut costs,” he said.
Meanwhile, despite the company’s sudden shift in strategy this year, Jassy is still defending Amazon’s massive hiring and explosive growth over the past few years.
Amazon’s retail business grew rapidly in the early days of the epidemic, hiring as many as 1,400 people a day at one point. “At that time, the epidemic forced us to increase investment and build infrastructure faster than we could have imagined,” Jassy said on Wednesday.
He also said: “We know that we may face the problem of overextension.”
This year, the economic environment for technology companies has been generally sluggish, and many technology companies have cut costs by laying off workers. Amazon has also been spurred to implement cost-cutting measures. Twitter, Meta and Microsoft (MSFT) have all announced job cuts this year, and many are doing so for a similar reason: demand for tech products has fallen as the lockdown phase ends.
Amazon did not immediately respond to Fortune’s request for comment.
One of Amazon’s planned cuts is in its devices division, which has been a drag on the company’s performance in recent years. The division, which once employed more than 10,000 people and designed devices like the Alexa and Echo, could cost the company $5 billion a year in recent years, The Wall Street Journal reported last month.
Weak device sales have forced Amazon to focus on other divisions, including advertising and sales. The advertising business contributed $31.2 billion in revenue to the company last year. Despite the usually busy holiday season, at its most recent shareholder meeting in October, Amazon reported revenue that missed Wall Street expectations and warned that it expected lower sales ahead.
The company’s officials said they expect fourth-quarter revenue of between $140 billion and $148 billion, an annual growth rate of just 2% to 8%, well below the 10% annual growth it achieved in the fourth quarter of last year. .
Following Amazon’s dismal earnings report, analysts at Bank of America believe that “the U.S. may already be in a recession” as consumer spending shows signs of slowing.
But this week, retailers got off to a record start to the festive season strongly, potentially improving the economic outlook going forward. Consumer spending hit a record $11.3 billion on Cyber Monday, according to Adobe Analytics, which announced on Wednesday that Thanksgiving weekend shopping also “broke records” with spending “the largest ever.” (Fortune Chinese website)
Translated by: Liu Jinlong
Reviewer: Wang Hao
Amazon isn’t sorry about years of explosive growth and overhiring—even as it kicks off the largest job-cutting campaign in its history.
Amazon CEO Andy Jassy announced in November that the company would begin laying off employees across multiple departments, and suggested terminations are likely to continue into 2023. Jassy’s comment came days after the New York Times reported the company had plans to em 1 lay off pla ros 0 its devices, retail, and human resources divisions.
Jassy justified the mass layoffs on Wednesday at the New York Times DealBook Summit, citing economic uncertainty ahead that prompted the company to cut back on expenses. “We just felt like we needed to streamline our costs,” he said.
But at the same time, Jassy defended the wave of hiring and explosive growth Amazon has enjoyed over the past few years, despite the abrupt about-turn the company has been forced to take this year.
Amazon’s retail business grew enormously during the early days of the pandemic, and at one point the company was adding as many as 1,400 new hires a day. “It forced us to make decisions at that time to spend a lot more money and to go much faster in building infrastructure than we ever imagined we would,” Jassy said Wednesday.
“We knew we might be overbuilding,” he added.
Amazon’s cost-cutting measures this year were sparked by a darkening economic environment for tech sector companies, many of which have also resorted to layoffs to keep expenses down. Twitter, Meta, and Microsoft have announced cuts this year too, and many have called out a similar culprit: falling demand for tech products as the lockdown stage of the pandemic faded.
Amazon did not immediately reply to Fortune’s request for comment.
One of the Amazon divisions going through layoffs is its devices department, which has been a drain on the company in recent years. The unit, which in the past had over 10,000 employees working on devices including Alexa and Echo, may have been losing the company as much as $5 billion annually in recent years, the Wall Street Journal reported last month.
Weak sales in devices have seen Amazon lean on other units including its advertising operation—which generated $31.2 billion in revenue last year—as well as sales. lower sales in the future after reporting dismal earnings that fell short of Wall Street expectations.
The company’s managers said they expect fourth quarter revenue this year to be between $140 billion and $148 billion, which would represent annual growth of just 2% to 8%, far below the 10% annual growth the company managed during the fourth quarter of last year .
Amazon’s bad earnings report prompted Bank of America analysts to claim that “the recession may be here already” as consumer spending shows signs of slowing down.
But that outlook may have been boosted by the record-strong start to the holiday season retailers observed this week. Consumers spent a record $11.3 billion on Cyber Monday, according to Adobe Analytics, and the company announced on Wednesday that the Thanksgiving holiday shopping weekend been “record-breaking” and its “biggest ever.”
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