Amazon CEO hints possible layoff wave in annual company letter. Here’s what he says

Last month, Amazon carried out its second phase of layoffs resulting in the termination of 9,000 employees. In an internal letter to staff, CEO Andy Jassy emphasized the decision was in the company’s best interest in the long run. Amazon is providing affected employees with a separation payment, transitional health insurance benefits, and job placement assistance. This follows a previous round of job cuts where 18,000 employees were let go.

“We also reprioritized where to spend our resources, which ultimately led to the hard decision to eliminate 27,000 corporate roles. There are a number of other changes that we’ve made over the last several months to streamline our overall costs, and like most leadership teams, we’ll continue to evaluate what we’re seeing in our business and proceed adaptively,” said the company CEO in his letter to shareholders.

Jassy stated that Amazon had to conduct a thorough analysis of each business and invention within the company to determine whether they had strong potential to generate revenue, operating income, free cash flow, and return on invested capital in the long run. He explained that this involved examining every initiative and determining if the company had enough conviction in each one.

The recent round of layoffs was Amazon’s largest in history. Nevertheless, Jassy remains optimistic about the company’s future prospects. He acknowledged that, to cut costs, Amazon had to close various physical stores and businesses, as well as discontinue initiatives such as Amazon Fabric and Amazon Care. Nonetheless, he expressed confidence that these decisions would enable the company to focus on its core strengths and continue to innovate in ways that would drive growth in the long term.

Jassy noted in his recent letter that Amazon has made various other changes over the past few months to reduce costs, and that the company’s leadership team will continue to evaluate its business performance and make adjustments as needed. He also revealed that, starting in May, Amazon employees will be required to work in the office for at least three days per week.

Jassy mentioned that Amazon has been investing heavily in AI tools, particularly in the development of its own Large Language Models (LLMs), which have gained significant popularity in recent months. He expressed confidence that these LLMs would revolutionize and enhance virtually every customer experience and indicated that Amazon will continue to make substantial investments in these models across all its consumer, seller, brand, and creator experiences.