Amazon joins Netflix and Tesla in cutting jobs as it lays off 18,000 workers
Yahoo Finance Live anchors discuss the latest round of layoffs in the tech sector as Amazon announces it will cut 18,000 jobs.
RACHELLE AKUFFO: Amazon will expand its planned job cuts to 18,000 workers, the biggest layoffs in its history. Now, CEO Andy Jassy said the move would impact Amazon's stores and the group's people experience and tech solutions divisions. Now for many employees, the next few weeks will be excruciating as they won't find out if they've been laid off until January 18.
So, I mean, a lot of people were shocked that this was perhaps an even greater set of layoffs than expected. We know that a lot of tech companies have been having layoffs, overhired too much during the pandemic without really sort of thinking what the long-term vision would be, but much more than expected here.
AKIKO FUJITA: Yeah, Andy Jassy saying in a letter to employees that essentially companies that last a long time go through different phases. They're not in heavy people-expansion mode every year. But in many ways, this is kind of a similar story that we've heard from so many other tech companies. It is that we grew too quickly during the pandemic. Now there is a whiplash happening in the other direction where they're having to cut costs, especially in the face of an uncertain economic environment.
Amazon obviously getting a lot of criticism, largely because Andy Jassy is still relatively new in this role. And the question I think internally could be then become, well, can he, like Jeff Bezos, be able to navigate some of these headwinds?
I thought it was some interesting commentary this morning though, Rachelle. Brent Thill from Jefferies on our morning show saying that the pandemic created a type of bubble for these tech companies, that things grew too quickly. We have heard this over and over. We hired too many people. We expanded too quickly. And now you're seeing the reckoning on the other end.
And he says specifically that he doesn't think there's going to be a real turnaround until 2024 and that 80% to 90% of tech companies will show decelerated growth this year. And you see all the names on the screen right there. This is not an Amazon-specific story, although 18,000 is a significant number, in terms of tech companies really looking at their balance sheets and say, we're going to have to shrink a little more. We're going to have to be a little more cost efficient because the economics just don't look good right now, and there's a lot of uncertainty.
RACHELLE AKUFFO: I mean, even when you think of within the companies themselves, you have the broader tech sell-off that we've seen, but also within the companies, their individual problems-- growing too fast. Perhaps also as we look at the case of Amazon, this e-commerce boom-- yes, it was, of course, going to boom during the pandemic, but what was going to happen afterwards? There was going to be some sort of normalcy, some sort of leveling off. And there are a lot more players in this space now. You have your Walmarts taking some of their market share as well. So we figured at some point there was going to be a sort of leveling off.
But as we look at individual stories-- for example, when you think of Tesla and the issues with Twitter. Each has their own sort of individual problems that are just compounding the broader tech sell-off at the moment.
AKIKO FUJITA: It is also about companies really having to find their focus. I mean, you talked about e-commerce with Amazon. That's certainly been slowing down. We've seen that reflected in their earnings.
But when you think about this letter that Andy Jassy has put out, you know, where they're actually making the cuts, it is about the company doubling down on things that have been really working for them. Obviously cloud and AWS continue to be a big driver for them. You look at some other companies like Salesforce yesterday coming out, and they're saying they're going to be cutting 10% of their workforce.
So we're increasingly hearing from these companies not just about the growth that they saw-- the outsized growth, I should say, they saw over the last few years but also the need to focus a little more, not dabble in-- not, you know, loss-making ventures but also really focus on where the revenue drivers are and really be profitable.
At the end of the day, it's not growth at all costs anymore. It is about profitability, and for these publicly traded companies, that is number one in terms of what investors are looking at.
RACHELLE AKUFFO: It's true. And it is worth noting that these layoffs represent 1.2% of their entire workforce, so some context there. Obviously it's a lot of people, still obviously 18,000, but when you think of the size of an Amazon, worth keeping that in mind as well.