The Amazon headquarters sits virtually empty on March 10, 2020 in downtown Seattle, Washington. In response to the coronavirus outbreak, Amazon recommended all employees in its Seattle office to work from home, leaving much of downtown nearly void of people.
John Moore | Getty Images
Amazon’s 18,000-plus job cuts announced this month are being felt broadly across the company’s sprawling operations, from physical retail technology and grocery stores to robotics and drone delivery, and even in cloud computing.
That’s according to a spreadsheet created after the layoff announcement by an employee, who has encouraged those affected to submit their information for use by recruiters. The database, which was circulated widely on LinkedIn, provides a window into the businesses hit with layoffs.
CEO Andy Jassy wrote in a blog post in early January that “several teams” were impacted but that thecuts would primarily be centered in Amazon’s worldwide stores and human resources divisions. Beyond that, the company provided scant details on where downsizing would take place.
An Amazon spokesperson pointed CNBC to Jassy’s blog post on the layoffs.
Subsequent filings with state agencies offered a glimpse into the geographical dispersal of the layoffs. In Amazon’s home state of Washington, at least 2,300 employees lost their jobs, according to Worker Adjustment and Retraining Notification (WARN) filings. Over 500 took place in California, including in engineering and recruiting divisions, while roughly 300 were in New York, filings show.
When Amazon reports fourth-quarter results on Thursday, executives are likely to face questions regarding the headcount reductions and the expected financial impact. Revenue growth is expected to sink to 6% and remain in single digits until the final period of 2023, according to analyst estimates, as Amazon reckons with the threats of a recession and a decline in consumer spending.
Amazon shares lost half their value in 2022, the worst year for shareholders since the dot-com crash in 2000.
The latest wave of layoffs, which is poised to be largest round of cuts in Amazon’s history, follow more than a decade of unbridled growth and massive expansion in the company’s network of fulfillment centers. Jassy blamed the need for cuts on “labor shortages, supply chain difficulties, inflation, and productivity overhang from growing our fulfillment and transportation networks so substantially during the pandemic.”
Here’s a breakdown of where job cuts took place. CNBC verified that the staffers listed as Amazon employees worked for the company.
Grocery and Physical stores
Employees working on various retail technologies, including Amazon’s cashierless checkout software called Just Walk Out, its palm-based payment service and Dash smart carts were part of the layoffs. The unit was recently moved to Amazon’s cloud-computing division after previously being housed under its retail organization.
There were cuts in the Fresh stores and online grocery delivery businesses for people employed as program managers, store designers, supply chain managers and software engineers.
Amazon Go and Go Grocery cashierless convenience stores and supermarkets were also hit with layoffs.
Zappos
Online shoe seller Zappos joined Amazon via acquisition in 2009. Employees with titles including program manager, software engineer and product buyer were among those laid off.
Amazon Robotics
Amazon Robotics is the company’s unit focused on automating aspects of its warehouse operations. The division evolved out of Amazon’s acquisition of Kiva Systems, a manufacturer of warehouse robots, for $775 million in 2012.
Hardware development engineers, mechatronics engineers, network engineers, applied science managers, and technical product managers were part of the job cuts.
Amazon Web Services
AWS pioneered the market for cloud infrastructure, allowing businesses to offload their servers and storage needs and pay by subscription and usage. The division now generates $80 billion in annual revenue and substantially all of the company’s profits.
Among those who lost their jobs had titles of software development engineer, senior program manager, account representative, cloud architect and quality assurance engineer.
AWS CEO Adam Selipsky said in an interview late last year at the company’s annual Reinvent customer conference that “we do see some customers who are doing some belt-tightening now.”
Operations
Amazon’s operations division serves as a catchall for many far-reaching units inside the company. The organization oversees Amazon’s sprawling fulfillment and delivery businesses, among other things.
Employees involved in fulfillment center expansion, warehouse IT management, package pickup and returns, delivery routing software, environmental health and safety, workplace health and safety, and shipping and delivery service Amazon Logistics were among those involved in the cuts.
Payments
The company’s payments organization, which oversees units like online payments processing service Amazon Pay, was also hit with layoffs. Engineers, product managers and staffers working on the company’s Venmo checkout integration were among those laid off.
Health care
The cuts included employees working on Amazon’s various health-care offerings. Amazon Pharmacy, the online pharmacy it launched in 2020, saw program managers, risk compliance managers and billing managers let go as part of the job cuts. Additionally, employees working on digital health tools and the Halo health and fitness tracker lost their jobs.
Amazon has faced numerous challenges in its effort to crack the heal;th-care market. The company said last year that it was winding down its telehealth service, and the two founders of online pharmacy PillPack, which Amazon bought in 2018, announced their departures. Hundreds of employees were let go in 2022 between a division called Amazon Care and Care Medical, an independent company that was contracted to work with Amazon.
Marketplace
Employees in Amazon’s third-party marketplace unit were among those whose jobs were cut. The business oversees the millions of sellers who hawk their wares on the website and app.
Staffers involved in third-party seller services, seller experience, seller financial technology, software development, and online seller communities were let go. Amazon Launchpad, a unit that assists new sellers, also experienced heavy cuts.
Real estate
Employees involved in construction and facilities planning, real estate transactions, disaster recovery, and physical stores development lost their jobs.
Retail
Retail units that were affected include supply chain optimization technology, pricing, vendor management, the Amazon Shopping app and Amazon’s business-to-business marketplace. The cuts also included fashion stylists, who provided clothing recommendations to Amazon shoppers as part of its “try before you buy” service, formerly known as Prime Wardrobe.
UK Finance Minister Rachel Reeves makes a speech during the Labour Party Conference that is held at the ACC Liverpool Convention Center in Liverpool, UK on September 23, 2024.
Anadolu | Getty Images
LONDON — British tech bosses and venture capitalists are questioning whether the country can deliver on its bid to become a global artificial intelligence hub after the government set out plans to increase taxes on businesses.
On Wednesday, Finance Minister Rachel Reeves announced a move to hike capital gains tax (CGT) — a levy on the profit investors make from the sale of an investment — as part of a far-reaching announcement on the Labour government’s fiscal spending and tax plans.
The lower capital gains tax rate was increased to 18% from 10%, while the higher rate climbed to 24% from 20%. Reeves said the increases will help bring in £2.5 billion ($3.2 billion) of additional capital to the public purses.
It was also announced that the lifetime limit for business asset disposal relief (BADR) — which offers entrepreneurs a reduced rate on the level of tax paid on capital gains resulting from the sale of all or part of a company — would sit at £1 million.
She added that the rate of CGT applied to entrepreneurs using the BADR scheme will increase to 14% in 2025 and to 18% a year later. Still, Reeves said the U.K. would still have the lowest capital gains tax rate of any European G7 economy.
The hikes were less severe than previously feared — but the push toward a higher tax environment for corporates stoked the concern of several tech executives and investors, with many suggesting the move would lead to higher inflation and a slowdown in hiring.
On top of increases to CGT, the government also raised the rate of National Insurance (NI) contributions, a tax on earnings. Reeves forecasted the move would raise £25 billion per year — by far the largest revenue raising measure in a raft of pledges that were made Wednesday.
Paul Taylor, CEO and co-founder of fintech firm Thought Machine, said that hike to NI rates would lead to an additional £800,000 in payroll spending for his business.
“This is a significant amount for companies like us, which rely on investor capital and already face cost pressures and targets,” he noted.
“Nearly all emerging tech businesses run on investor capital, and this increase sets them back on their path to profitability,” added Taylor, who sits on the lobbying group Unicorn Council for U.K. FinTech. “The U.S. startup and entrepreneurial environment is a model of where the U.K. needs to be.”
Chances of building ‘the next Nvidia’ more slim
Another increase to taxation by way of a rise in the tax rate for carried interest — the level of tax applied to the share of profit a fund manager makes from a private equity investment.
Reeves announced that the rate of tax on carried interest, which is charged on capital gains, would rise to 32%, up from 28% currently.
Haakon Overli, co-founder of European venture capital firm Dawn Capital, said that increases to capital gains tax could make it harder for the next Nvidia to be built in the U.K.
“If we are to have the next NVIDIA built in the UK, it will come from a company born from venture capital investment,” Overli said by email.
“The tax returns from creating such a company, which is worth more than the FTSE 100 put together, would dwarf any gains from increasing the take from venture capital today.”
The government is carrying out further consultation with industry stakeholders on plans to up taxes on carried interest. Anne Glover, CEO of Amadeus Capital, an early investor in Arm, said this was a good thing.
“The Chancellor has clearly listened to some of the concerns of investors and business leaders,” she said, adding that talks on carried interest reforms must be “equally as productive and engaged.”
Britain also committed to mobilizing £70 billion of investment through the recently formed National Wealth Fund — a state-backed investment platform modelled on sovereign wealth vehicles such as Norway’s Government Pension Fund Global and Saudi Arabia’s Public Investment Fund.
This, Glover added, “aligns with our belief that investment in technology will ultimately lead to long term growth.”
She nevertheless urged the government to look seriously at mandating that pension funds diversify their allocation to riskier assets like venture capital — a common ask from VCs to boost the U.K. tech sector.
Clarity welcomed
Steve Hare, CEO of accounting software firm Sage, said the budget would mean “significant challenges for UK businesses, especially SMBs, who will face the impact of rising employer National Insurance contributions and minimum wage increases in the months ahead.”
Even so, he added that many firms would still welcome the “longer-term certainty and clarity provided, allowing them to plan and adapt effectively.”
Meanwhile, Sean Reddington, founder and CEO of educational technology firm Thrive, said that higher CGT rates mean tech entrepreneurs will face “greater costs when selling assets,” while the rise in employer NI contributions “could impact hiring decisions.”
“For a sustainable business environment, government support must go beyond these fiscal changes,” Reddington said. “While clearer tax communication is positive, it’s unlikely to offset the pressures of heightened taxation and rising debt on small businesses and the self-employed.”
He added, “The crucial question is how businesses can maintain profitability with increased costs. Government support is essential to offset these new burdens and ensure the UK’s entrepreneurial spirit continues to thrive.”
Apple CEO Tim Cook (C) joins customers during Apple’s iPhone 16 launch in New York on September 20, 2024.
Timothy A. Clary | Afp | Getty Images
Apple’s second-largest division after the iPhone has turned into a $100 billion a year business that Wall Street loves.
In Apple’s earnings report on Thursday, the company said it reached just under $25 billion in services revenue, an all-time high for the category, and 12% growth on an annual basis.
“It’s an important milestone,” Apple CFO Luca Maestri said on a call with analysts. “We’ve got to a run rate of $100 billion. You look back just a few years ago and the the growth has been phenomenal.”
Apple first broke out its services revenue in the December quarter of 2014. At the time, it was $4.8 billion.
Apple’s services unit has become a critical part of Apple’s appeal to investors over the past decade. Its gross margin was 74% in the September quarter compared to Apple’s overall margin of 46.2%.
Services contains a wide range of different offerings. According to the company’s SEC filings, it includes advertising, search licensing revenue from Google, warranties called AppleCare, cloud subscription services such as iCloud, content subscriptions such as the company’s Apple TV+ service, and payments from Apple Pay and AppleCare.
On a January 2016 earnings call, when the reporting segment was relatively new, Apple CEO Tim Cook told investors to pay attention.
“I do think that the assets that we have in this area are huge, and I do think that it’s probably something that the investment community would want to and should focus more on,” Cook said.
Over the years, Apple has compared its services business to the size of Fortune 500 companies, which are ranked by sales, to give a sense of its scale. After Thursday, Apple’s services business alone, based on its most recent run rate, would land around 40th on the Fortune 500, topping Morgan Stanley and Johnson & Johnson.
Services appeals to investors because many of the subscriptions contained in it are billed on a recurring basis. That can be more reliably modeled than hardware sales, which will increase or decrease based on a given iPhone model’s demand.
“Yes, the the recurring portion is growing faster than the transactional one,” Maestri said on Thursday.
Apple’s fourth-quarter results beat Wall Street expectations for revenue and earnings on Thursday, but net income slumped after a one-time charge as part of a tax decision in Europe. The stock fell as much as 2% in extended trading.
Apple boasts to investors that its sales from Services will grow alongside its installed base. After someone buys an iPhone, they’re likely to sign up for Apple’s subscriptions, use Safari to search Google, or buy an extended warranty.
Apple also cites a “subscription” figure that includes both its first-party services, such as Apple TV+ subscriptions, and users who sign up to be billed by an App Store app on a recurring basis.
The company said the installed base and subscriptions hit all-time-highs, but didn’t give updated figures. Apple said it had 2.2 billion active devices in February, and in August said it had topped 1 billion paid subscriptions.
Still, Apple faces questions about how long its services business can continue growing at such a rapid rate. Between 2016 and 2021, the unit sported significantly higher growth, reaching 27.3% at the end of that stretch.
In fiscal 2023, services growth dropped to 9.1% for the year, before recovering to about 13% the next year. Apple told investors that it expected services growth in the December quarter to be about what it was in fiscal 2024.
Cook was asked on Thursday what Apple could do to make some of its services and its Apple One subscription bundle grow faster.
“There’s lots of customers to try to convince to take advantage of it,” Cook said. “We’re going to continue investing in the services and adding new features. Whether it’s News+ or Music or Arcade, that’s what we’re going to do.”
Amazon CEO, Andy Jassy speaking with CNBC’s Jim Cramer on Mad Money in Seattle, WA. on Dec. 6th, 2023.
CNBC
Amazon CEO Andy Jassy is trying to reassure investors who may be worried about the future payoff of the company’s massive investments in generative artificial intelligence.
On a conference call with analysts following the company’s third-quarter earnings report on Thursday, Jassy pointed to the success of Amazon’s cloud computing business, Amazon Web Services, which has become a crucial profit engine despite the extreme costs associated with building data centers.
“I think we’ve proven over time that we can drive enough operating income and free cash flow to make this a very successful return on invested capital business,” Jassy said. “We expect the same thing will happen here with generative AI.”
Amazon spent $22.6 billion on property and equipment during the quarter, up 81% from the year before. Jassy said Amazon plans to spend $75 billion on capex in 2024 and expects an even higher number in 2025.
The jump in spending is primarily being driven by generative AI investments, Jassy said. The company is rushing to invest in data centers, networking gear and hardware to meet vast demand for the technology, which has exploded in popularity since OpenAI released its ChatGPT assistant almost two years ago.
“It is a really unusually large, maybe once-in-a-lifetime type of opportunity,” Jassy said. “And I think our customers, the business and our shareholders will feel good about this long term that we’re aggressively pursuing it.”
AI spending was a big topic on tech earnings calls this week. Meta on Wednesday raised its capital expenditures guidance, and CEO Mark Zuckerberg said he was “quite happy” with the team’s execution. Meanwhile, Microsoft‘s investment in OpenAI weighed on its fiscal first-quarter earnings released on Wednesday, and the company said capital spending would continue to rise. A day earlier, Alphabet CFO Anat Ashkenazi warned the company expects capital spending to grow in 2025.
Amazon has said its cloud unit has picked up more business from companies that need infrastructure to deploy generative AI models. It’s also launched several AI products for enterprises, third-party sellers on its marketplace and advertisers in recent months. The company is expected to announce a souped-up version of its Alexa voice assistant that incorporates generative AI, something Jassy said will arrive “in the near future.”
Amazon hasn’t disclosed its revenue from generative AI, but Jassy said Thursday it’s become a “multi-billion-dollar revenue run rate” business within AWS that “continues to grow at a triple-digit year-over-year percentage.”
“It’s growing more than three times faster at this stage of its evolution as AWS itself grew, and we felt like AWS grew pretty quickly,” he added.