The Business Times

Amazon surges the most since February on cost-cutting review

Published Fri, Nov 11, 2022 · 06:43 AM

AMAZON.COM shares gained 12 per cent on news that chief executive officer Andy Jassy has embarked on a review of expenses, part of broader efforts to streamline the world’s largest e-commerce company.

Amazon said in a statement to Bloomberg News that its annual operating-plan review will have a particular focus on trimming expenses this year as it copes with a slowing economy. The Wall Street Journal reported earlier that the assessment was underway and that employees in certain divisions have been told to look for jobs elsewhere in the company because their teams are being suspended or shut down.

“Our senior leadership team regularly reviews our investment outlook and financial performance, including as part of our annual operating plan review, which occurs in the fall each year,” the Seattle-based company said in the statement. “As part of this year’s review, we’re of course taking into account the current macro-environment and considering opportunities to optimise costs.”

The news boosted a stock that was already up on positive inflation news. The latest data on consumer prices came in better than expected on Thursday (Nov 10), easing concerns about Federal Reserve interest rate hikes.

Amazon shares rose to US$96.63, marking their largest one-day gain since Feb 4. They had been down 48 per cent this year through Wednesday, part of a rout that has hammered the biggest tech companies.

Already, Amazon has been taking increasingly aggressive steps to rein in expenditures. The company said last week that it was pausing “new incremental” hiring across its corporate workforce as it copes with a slower economy. Amazon has effectively stopped recruiting for new roles companywide, even at profitable divisions, such as its advertising business.

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Amazon said on Thursday that it remains confident in its overall operations, as well as initiatives such as Prime Video, Alexa, Grocery, Kuiper, Zoox and its healthcare efforts.

Most big tech companies are hitting the brakes on hiring plans, but Amazon is dealing with an especially severe pandemic hangover. The company almost doubled its headcount during Covid-19 restrictions to handle a surge in orders from home-bound consumers.

When shoppers returned to their previous habits this year, Amazon had to pare back its logistics operations. As the economic outlook darkened and it became clear that a slowdown in online sales growth was here to stay, the cutbacks spread to Amazon’s corporate offices.

When Amazon forecast its slowest-ever holiday growth last month, chief financial officer Brian Olsavsky said the company was “taking actions to tighten our belt”. BLOOMBERG

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