Amazon, probably the world's best known online retailer, has announced the redundancy of 15 percent of its worldwide staff, a total of 13,000 people.
Amazon now joins a long list of companies that have incurred major shortfalls to its expected financial targets for the last quarter of 2000. With a net loss for the period of $545m Amazon will have a difficult challenge ahead keeping the company afloat.
“I’m sure no company enjoys making this kind of decision,” Amazon's chief Jeff Bezos told IDG's News Service, “but it was clearly the right decision for us as we pursue making this into a profitable company.”
The job cuts are going to be mainly in the US, with positions being lost right the way through the workforce. Amazon hopes that these cuts will save costs enabling the company to compete against the expected slow sales for 2001.
The cutbacks are expected to result in restructuring charges of more than $150 million, including redundancy settlements, during the first half of this year.
In a statement to investors Jeff Bezos, CEO of Amazon, said the company had ended 2000 with $1.1bn in cash and would still have about $900m by the end of 2001.
But 2001 looks challenging for Amazon, which will have to dramatically increase sales throughout the year to avoid being another dotcom failure.