Amazon.com Shelves 150 in Surprise Layoff

SAN FRANCISCO (01/28/2000) - Amazon.com Inc. is showing new signs of becoming a corporate grown-up.

The giant online retailer today announced the first layoffs in its five-year history, cutting 150 jobs or about 2 percent of its work force. Amazon said the job cuts, most of them at its Seattle headquarters, were across company divisions and were not tied to seasonal employment.

Amazon spokesman Bill Curry said the cuts were part of an ongoing organizational review of the company's employment needs. "No one should read anything into this regarding (changes in) our strategy," Curry said. "We are still growing and expect to be hiring."

The cuts come at an inauspicious time. Amazon was just beginning to regain the confidence of investors after announcing a string of cash-generating deals with companies such as Greenlight.com and Drugstore.com. Analysts upgraded the stock earlier in the week, saying that profitability was no longer unattainable, and the company's shares recovered some of their recent losses.

The timing of the cuts surprised many Amazon watchers. The company announced the layoffs in the middle of the trading session, on a day when the markets were heading south. What's more, Amazon is scheduled to report its fourth-quarter results on Wednesday, and companies often wait for such announcements to disclose corporate downsizing.

"It came out of left field and caught everyone off guard," said Jeetil Patel, an analyst at Deutsche Bank Alex Brown. The surprise announcement sent Amazon shares down more than US$6, or 10 percent, to $60. The stock closed today at $61.69.

If investors were spooked by the news, analysts took the announcement in stride. "I think with a lot of organizations that have seen this type of growth over several years, you need to make sure that everyone in the organization is working toward the same goal," Patel said. Amazon's workforce has grown to about 7,500 in the past five years.

Still the layoffs are sure to raise questions about Amazon's business and are likely to be a drag on employee morale. The job cuts also blemish Amazon's "benevolent giant" image. The company has received overwhelming favorable press coverage, and Chief Executive Officer Jeff Bezos, who was recently picked as Time magazine's Person of the Year, has been portrayed as the smart, nice guy next door. The layoffs could raise questions about the validity of that image, showing the public an Amazon that is playing by the same ruthless rules that govern other corporate giants.

On Jan. 5, Amazon preannounced some of its fourth-quarter results, reporting sales of $650 million.

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