Saturday, January 29, 2000
Amazon takes hit on layoff news
Stock drops $5.25 as e-tailer cuts 150
BY MICHAEL J. MARTINEZ
The Associated Press
SEATTLE Amazon.com's stock fell Friday after the company said it was laying off 150 people, the first time the leading online retailer has reduced its work force.
Amazon, which added more than 5,000 people to its payroll in 1999, announced the layoffs at a company meeting Thursday night.
The move is an internal reorganization and represents about 2 percent of Amazon's total work force, Amazon.com spokesman Bill Curry said.
We do ongoing organizational reviews to just ensure that we always have the right skills and the right number of people in line with the mission of the company, Mr. Curry said.
Investors reacted negatively to the move, sending Amazon's shares down $5.25 to $61.683/4.
Despite the market swing, analysts were bullish on Amazon's deci sion to pare back its payroll.
Job cuts are never fun. I hate the personal side of this, said Tom Wyman, an analyst with J.P. Morgan. But investors should be pleased about this. I consider this a very positive sign that this management team is prepared to make the tough decisions.
He also credited Warren Jenson, Amazon's new chief financial officer, with attempting to rein in the company's bottom line. Mr. Jenson is a former chief financial officer with Delta Airlines and the NBC television network.
Mr. Wyman said Amazon's growth provided a strong holiday season with outstanding customer service, especially considering that other online retailers had problems delivering in time for Christmas. However, now that the season is over, Mr. Wyman said the company is right to make changes.
Mr. Curry said the layoffs were unrelated to seasonal staffing adjustments.
The company is expected to release its earnings report for the final three months of 1999 Wednesday.
Most of the cuts will be at the company's Seattle headquarters, and those let go will receive severance packages and job-placement assistance, Mr. Curry said.
The company will still continue to hire, he added, and former employees can reapply for new jobs.
Many other Internet retailers have announced job cuts and restructuring after the holiday season, causing some concerns on Wall Street about whether the entire electronic commerce sector is due for a shakeout.
Online software retailer Beyond.com announced a major restructuring last week that could mean layoffs of up to 20 percent of the company's 375-person work force. Value America, a general online retailer, slashed about 300 jobs in December because of competition and lackluster sales.
The effects on stock prices have been devastating. Beyond.com's stock is now trading just 25 cents above its all time low of $6 per share and well off its 52-week high of $37. Meanwhile, Value America, which went public in April, has fallen from a high of 74 in late spring to $5.061/4.
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