Amazon launches cost-cutting review of unprofitable business units

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Amazon is carrying out a broad cost-cutting review that will pare back parts of the business that have not been profitable.

Andy Jassy

Andy Jassy warned there was ‘a lot happening in the macroeconomic environment’ that could hit Amazon’s top and bottom lines

Amazon chief executive Andy Jassy is leading a months-long evaluation of the business that will closely evaluate its Alexa business and more unprofitable units, The Wall Street Journal reported.

According to documents seen by WSJ, the Alexa business has more than 10,000 employees, is a major recipient of investment capital and is part of the unit that has an operating loss of more than $5bn (£4.3bn) per year.

Amazon is considering if it should focus on adding new capabilities to its voice assistant Alexa, which would require further investment, as the majority of customers only use it for a few functions, the report said.

The company is also said to have told employees in some other unprofitable divisions to look for jobs elsewhere in the business, as the teams they were working on were being suspended or closed, according to WSJ sources.

An Amazon spokesman said: “Our senior leadership team regularly reviews our investment outlook and financial performance, including as part of our annual operating plan review.

“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 spokesman said Amazon is “as optimistic about Alexa’s future today as we’ve ever been, and it remains an important business and area of investment for Amazon”.

Earlier this month, Amazon sent the market reeling when it warned that its operating profit could be anywhere between nothing and $4bn (£3.5bn), as uncertainty swirls around consumer spending this Christmas.

Jassy cautioned that there was “a lot happening in the macroeconomic environment” that could hit its top and bottom lines during the holiday season.

Amazon warned the market that sales may come in between $140bn (£121.3bn) and $148bn (£128.2bn) during its fourth quarter. Analysts had previously expected $155.15bn (£134.4bn).