's stock plummets as company announces 150 layoffs

Posted: Friday, January 28, 2000

SEATTLE (AP) -'s stock fell more than 8 percent Friday after the company announced it was laying off 150 people, the first time the leading online retailer has reduced its workforce.

After adding more than 5,000 people to its payroll in 1999, the company announced the layoffs at a company meeting Thursday night. The move, according to spokesman Bill Curry, is an internal reorganization and represents about 2 percent of Amazon's total workforce.

``We do ongoing organizational reviews to just ensure that we always have the right skills and the right number of people in line with the mission of the company,'' Curry said.

The markets reacted sharply, sending Amazon's shares down $5.50 to $61.43 in afternoon trading on the Nasdaq Stock Exchange.

Despite the market swing, analysts were bullish on Amazon's decision to pare back its payroll.

``Job cuts are never fun. I hate the personal side of this,'' said Tom Wyman, an analyst with J.P. Morgan. ``But investors should be pleased about this. I consider this a very positive sign that this management team is prepared to make the tough decisions.''

He also credited Warren Jenson, Amazon's new chief financial officer, with attempting to rein in the company's bottom line. Jenson is a former CFO with Delta Airlines and the NBC television network.

Wyman said Amazon's growth provided a strong holiday season with outstanding customer service, especially considering that other online retailers had problems delivering in time for Christmas. However, now that the season's over, Wyman said the company is right to make adjustments.

Curry said most of the cuts would be at the company's Seattle headquarters, and those let go would receive severance packages and job placement assistance.

He added that more organizational reviews would occur in the future, but that layoffs might not result every time. The company will still continue to hire, Curry said, and former employees can reapply for new jobs.

Curry said the layoffs were unrelated to seasonal staffing adjustments or to the company's upcoming earnings, due Feb. 2.

Many other Internet retailers have announced job cuts and restructuring after the holiday season, causing some concerns on Wall Street over whether the entire electronic commerce sector is due for a shakeout.

Online software retailer announced a major restructuring last week that could mean layoffs of up to 20 percent of the company's 375-person workforce. Value America, a general online retailer, slashed about 300 jobs in December due to competition and lackluster sales.

The effects on stock prices have been devastating.'s stock is now trading just 25 cents above its all time low of $6 per share, while Value America, which had its initial stock offering in April, fell from a high of 74 in late spring to just over $5 a share as of Friday afternoon.

Friday's jitters over Amazon may come from investors wondering if even the foremost pioneer of e-commerce could fall victim to the problems plaguing other companies. But most analysts still consider to be the long-term player in the online retail world.

``I would say that Amazon is making an adjustment at most. Business models in this world are constantly changing,'' said David Trossman, an analyst with First Union Securities.

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