Friday, Nov 25, 2022, 22:09 Economy

Amazon Finds Itself In Increasing Troubles: Too Many Departments Not Operating Despite Annual Profit

At first sight, one might think that things are going magnificently for Amazon with regard to finances. The brand's name continues to be omnipresent and the company is the most important shipper worldwide. Products such as the Echo series are present in many living rooms, and the online catalogue also provides hosting services as one of the most significant hosting platforms. However, things look slightly less favorable in reality, as we have previously mentioned in this report. The mail order aspect of the business is also the source of a significant deficit, just recently accounting for a quarterly loss of US$2.5 billion, and this comes at the same time as grim forecasts for the Christmas quarter. The sensational Christmas quarter of 2021, with its US$14 billion in profits, accounted for a significant plus – but did cover up some structural problems in the process. During the entire business year of 2022, it was the very successful AWS hosting business which rescued Amazon.

Echo & Alexa Departments A Money Grab
Now, there's another source of trouble that Amazon must tackle. Apparently, the Alexa department cost around US$10 billion, without even coming close to recuperating this expenditure. Now, the company hopes to return to its financial course, and approximately 10,000 employees will be let go. The main focus is on the "Worldwide Digital" sector of the company, which is responsible for the Echo product line, Alexa, and Prime Video. Here, Amazon is expected to especially thin out the hardware and Alexa-development departments.

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Jeff Bezos' Hobby
Amazon likely didn't expect the hardware division to be particularly profitable, yet the company nevertheless invested a great deal in its development. As early as 2016, the department had grown to 10,000 employees and come 2018, its expenditure had risen to about US$5 billion. The hardware sector of the company was one of Jeff Bezos' favorite projects, which is the reason for its continual budget increases. Now that Amazon has meanwhile taken on new leadership, the time has come to pull the ripcord on it.

AR Hardware Likely Impacted As Well
The future is still unknown, however, the hardware team is apparently already preparing for the likelihood that it will no longer continue the development of any new projects such as wireless AR/VR glasses. Amazon hopes to distance itself from the billion-dollar losses of the division and the generous mood for never-ending new projects without any foreseeable success has come to an end. Even if the company's yearly report did reveal a US$11 billion profit, this is only a third of last year's. Additionally, two of this year's four quarters reported losses. Too many "hobbies" without profitable operations have finally become unaffordable, even for a company as big as Amazon.

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