Amazon.com, the largest internet retailer by far, has announced
that it will cut 1,300 staff or 15% of its workforce due to reduced
sales predictions for the year ahead. Despite the setback, the B2C
bellwether expects to reach profitability during fiscal 2001.
The company released its official fourth quarter 2000 results
this week. Net sales for the fourth quarter of 2000 were $972
million, an increase of 44% on last year. For the year ended
December 31st, 2000, net sales were $2.76 billion, a 68% increase
over 1999.
"Over the past year, our US pro forma operating loss decreased
from 24% of net sales in the fourth quarter of 1999 to less than 2%
in the fourth quarter of 2000," said Warren Jenson, Amazon.com
chief financial officer. "While the strength of consumer spending
remains uncertain, and there are no guarantees, we expect
Amazon.com as a whole to reach operating profitability in the
fourth quarter of this year."
Morningstar.com analyst David Kathman said he believes “Amazon's
profitability goals are achievable given the company's new cost
cutting strategy”. The job losses will be in the US only, the cuts
being split between corporate headquarters, a distribution centre
and a customer service centre.
Amazon.com founder and CEO Jeff Bezos told Wall Street analysts
that the decision to axe the workers was “clearly the right
business decision for us as we pursue making this into a profitable
company.”
