January 28, 2000 12:25 PM PST
Amazon announces layoffs
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The cutbacks--at a high-flying company whose founder, Jeff Bezos, only recently was named Time magazine's "person of the year"--came as a surprise. They will be across the board, but mainly at Amazon's Seattle headquarters, the company said. Amazon's stock fell sharply in trading today, down as much as 10 percent.
"We regularly review the mission of the company and make sure we have the right skills to carry out the jobs," spokesman Bill Curry said.
Curry said the cutbacks stem from an "ongoing process" of reviewing the Internet retailer's organizational structure. He would not confirm or deny whether more layoffs are imminent.
The layoffs come just five days before Amazon will report fourth-quarter earnings.
The results will be closely watched by Wall Street. Many analysts, for example, will be watching to see whether Amazon turned a profit in its U.S. book business for the latest quarter, as promised.
Curry said the layoffs are unrelated to next week's earnings announcement. "I wouldn't read anything into this," he said.
But some analysts disagreed. "Look, Nokia isn't laying people off, Intel isn't laying people off, 10,000 Internet start-ups aren't laying people off," said Jeff Matthews, general partner with Ram Partners in Greenwich, Conn. "What does it tell you? It tells you their business has matured and they're hitting some kind of wall.
"Any other Internet company would take these people from one part of their business and plug them in somewhere else. It tells you that (Amazon's) business model doesn't work."
During the past 52 weeks, Amazon's stock has traded as high as $113 and as low as $41. The shares are down more than 45 percent from last month's high of $113.
Amazon has been on a rapid expansion binge, adding new product lines, but it has lost about $560 million as of the third quarter of 1999 since it began doing business in 1994.
Analysts increasingly have been looking for signs of a path to profitability for Internet retailers such as Amazon. They also have been focusing more on the similarities, not differences, between Internet retailers and their bricks-and-mortar counterparts.
The fears of rising interest rates, intense competition, and other factors recently have been hurting retail stocks.
On Jan. 5, Amazon said its 1999 fourth-quarter sales totaled more than $650 million, more than two and a half times 1998's fourth-quarter sales of $253 million and exceeding the $610 million in sales for all of 1998.
News.com's Jeff Pelline contributed to this report.