Feb 2, 2023 - Economy

Amazon CEO: We're working "really hard" to cut costs

man in suit

Amazon CEO Andy Jassy during the New York Times DealBook Summit in November. Photo by Michael M. Santiago/Getty Images

Amazon's reset isn't over.

State of play: The tech and logistics giant will stay on the cost-cutting course it started last year as the anomalous and massively beneficial economic conditions for its business created by the pandemic dissipate.

Driving the news: "We're working really hard to streamline our costs and trying to do so at the same time that we don't give up on ... long-term strategic investments," CEO Andy Jassy said on a call with analysts on Thursday evening.

  • Prior to his comments, Amazon released financial results for its Q4 2022 period showing a continued slowdown in its main e-commerce and cloud businesses, as well as the cost of its massive layoffs and investment in Rivian.

By the numbers: The company ended the year with 1.54 million workers, 4% fewer than at the end of 2021.

  • The more than 18,000 people impacted by job cuts have already been notified, and while not all have left, the company booked the cost of the adjustments — severance charges of $640 million — in the fourth quarter because that's when the decision was made.

The big picture: Last year was the first full calendar year of Amazon under Jassy, who led the company to close physical bookstores, slow warehouse openings and cut its Amazon Care telehealth unit.

  • "We took a fulfillment center footprint that we built over 25 years and doubled it in just a couple of years ... At the same time we built out a transportation network for last mile, roughly the size of UPS, in a couple of years ... so there's a lot to figure out how to optimize," he said.
  • "We're pleased with the progress we've made in Q4 ... but that work will extend into '23."

Yes, but: Cost cutting won't solve Amazon's growth problem.

  • Year-over-year online store revenue growth fell to 2% in Q4 from 13% in Q3, as consumers looked for deals before buying.
  • Revenue growth for Amazon Web Services, its profit engine and cloud business, slowed to 20% from 28% across the same time comparison as companies grew more conservative over last year.
  • For context, in Q2 of 2021, the last quarter of Amazon under Jeff Bezos, yearly revenue growth for online stores was 13%, and for AWS, it was 37%.

What to watch: Jassy called out Amazon's bets on streaming media and its low-earth orbit satellite program, Kuiper, among its bullish investments.

  • "It only takes one or two of them to become the fourth pillar for Amazon."
  • As for the immediate future, the company is "cautiously optimistic" about consumer spending, CFO Brian Olsavsky told reporters on a separate call.

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