Amazon (AMZN) shares moved lower Wednesday after the world's biggest online retailer began laying off workers in its devices and services division amid reported job cuts that could rise to as high as 10,000.
Amazon, the second-largest U.S. employer behind Walmart, with a global workforce of around 1.6 million, said it began notifying affected employees yesterday following what the group called a "deep set of reviews" that resulted in the decision that "some roles will no longer be required", according to a company blogpost.
The New York Times reported earlier this week that the layoffs will likely focus on the group's devices, retail and human resources divisions. The cuts, the largest in Amazon history, would represent around 10,000 people, or 3% of its global workforce.
Last week, The Wall Street Journal reported that Amazon, which became the first public company is history to shed more than a $1 trillion in market value earlier this week, will being a cost-cutting review lead by CEO Andy Jassy over the coming months, with a focus on its voice-assistant Alexa business.
"While I know this news is tough to digest, I do want to emphasize that the Devices & Services organization remains an important area of investment for Amazon, and we will continue to invent on behalf of our customers," said Amazon's senior vice president for devices and services David Limp.
"Having gone through times like this in the past I know that when there's a difficult economy, customers tend to gravitate to the companies and products they believe have the best customer experience and that take care of them the best," he added. "Historically, Amazon has done a very good job at this."
Amazon shares were marked 1.1% lower in late morning trading Wednesday to change hands at $97.90 each, extending the stock's three-month decline to around 32%.
“As part of our annual operating planning review process, we always look at each of our businesses and what we believe we should change. As we’ve gone through this, given the current macro-economic environment (as well as several years of rapid hiring), some teams are making adjustments, which in some cases means certain roles are no longer necessary," Amazon's global head of media relations said in an emailed statement to TheStreet. "We don’t take these decisions lightly, and we are working to support any employees who may be affected.”
The tech sector, including Amazon, is bracing for a wave of job cuts and hiring freezes over the final months of the year, as the sector faces headwinds including a slump in online ad sales and waning consumer demand.
Apple (AAPL) CEO Tim Cook said Tuesday that the tech giant has slowed some of it hiring into the final months of the year, adding to pressure on tech sector jobs that reflect growing concern for the health of the global economy.
Cook's indication for muted higher echoes that of ad giant Google (GOOGL), which said its fourth quarter headcount additions would be "significantly lower than Q3", and Microsoft (MSFT), which forecast only "minimal" headcount growth over the final three months of the year.
Meta Platforms (META), meanwhile, unveiled plans last week to slash more than 11,000 people from its global payroll, the biggest reduction in company history, as it grapples with mounting losses in its metaverse project and a pullback in ad spending that continues to hit sales at its flagship Facebook division.
Amazon issued a disappointing holiday revenue forecast in late October, and unveiled slowing growth in its lucrative Web Services business, both of which clouded a better-than-expected third-quarter earnings report.
Jassy told investors at the time that while he was "encouraged" by the third quarter progress, "we recognize there's still a lot of opportunity to continue to improve productivity and drive cost efficiencies throughout our networks."
"We have identified initiatives that the teams continue to work hard on, and we expect to see further improvement in the quarters ahead," he added.
