‘CONSIDERABLE PAIN’ IN AMAZON EARNINGS REPORT
NEW YORK — Amazon this past week reported worse-than-expected fourthquarter profits, but its revenue beat expectations boosted by sales in its cloudcomputing unit AWS, which is also seeing a slow-down in growth.
Amazon said it earned $300 million, or 3 cents per share, in the October-December quarter. Industry analysts were expecting the Seattle-based company to earn 17 cents a share, according to FactSet.
The e-commerce giant said its bottom line was dented by a $2.3 billion write-down of the value of its stock investment in elec- tric vehicle startup Rivian Automotive.
Amazon’s fourth quarter profits represent a significant drop from the $14.3 billion it posted during the same period in 2021, when the company had a nearly $12 billion gain from its investment in Rivian Automotive.
At the same time, Amazon said its overall revenue rose 9% to $149.2 billion, higher than the $145.7 billion analysts were expecting. It said it expects revenue of between $121 billion and $126 billion during the current quarter. Analysts had been expecting $125 billion.
The earnings report closes a rough 2022 for Amazon. The company’s stock lost nearly half of its value last year amid a broader sell-off of tech shares tied to rising inflation, interest rates and concerns about the wider economy. On Thursday, it posted a loss of $2.7 billion for the full-year.
“While some of this is down to the company’s investment in Rivian, which is putting significant pressure on the bottom line, it is also clear that a material slowdown across many parts of the business is causing considerable pain,” said Neil Saunders, managing director of GlobalData.
Amazon has been struggling to right-size its business in the past year as consumers pulled back from the pandemic-induced move toward online shopping. To keep up with the demand at the time, it boosted hiring at its corporate offices and its warehouses, nearly doubling its workforce to more than 1.6 million by the beginning of last year.
But as its retail business cooled, Amazon has been attempting to curb expenses that have outpaced sales in its North America and international businesses since the fourth quarter of 2021. It spent some of last year reducing its warehouse workforce through attrition, and canceling or delaying plans to open warehouses in different parts of the country. The company said Thursday its North America business grew by 13%, but expenses still outpaced growth.
Amazon has been further tightening its budget by eliminating certain parts of its business and laying off workers in the past few months amid rising concerns about whether the U.S. will dip into a recession. In November, it began what would be the largest set of job cuts among its corporate offices, expected to be over 18,000 jobs in total, according to a note to employees by the company’s CEO Andy Jassy. Other tech companies that hired rapidly during the pandemic, including Facebook parent Meta, Microsoft and Salesforce, have also been cutting jobs.
Shoppers have been reducing their spending in recent months amid high inflation and wider economic uncertainty. Retail sales fell a worse-than-expected 1.1% in December, following a revised 1% drop in November, according to the Commerce Department.
To entice budget-conscious shoppers, Amazon, along with other retailers, began offering holiday deals in October. The company said in November it saw its biggest ever Thanksgiving holiday shopping period. But Thursday’s report shows its online stores division fell by 2%.