Amazon reviewing unprofitable business units to cut costs

(Reuters) – Amazon.com Inc is undertaking a review of its unprofitable businesses, including the devices unit that houses voice assistant Alexa, to cut costs, the Wall Street Journal reported on Thursday, sending its shares up 11%.

Following a months-long review, Amazon has told employees in some unprofitable units to look for jobs elsewhere in the company, while moving to redeploy staff from certain teams to more profitable areas and closing teams in areas such as robotics and retail, the WSJ reported .

Amazon is closely evaluating its Alexa business and is currently considering whether it should focus on trying to add new capabilities to the voice assistant, which is available on a variety of Amazon devices, the report added.

Adding capabilities would require greater investment, and many customers use the device for only a few functions, according to the report.

The unit that houses Alexa has posted an operating loss of more than $5 billion a year, the WSJ reported, citing documents.

“We’re of course taking into account the current macro-environment and considering opportunities to optimize costs,” Amazon spokesperson Brad Glasser said.

Glasser said the company was “optimistic about Alexa’s future” as it remains an important business and area of ​​investment for Amazon.

The news comes just weeks after Amazon warned of a slowdown in growth for the busy holiday season when it generates the highest sales, saying inflation-wary consumers and businesses had less money to spend.

Last week, Amazon said it would freeze hiring to corporate workforce for the next few months due to an “unusual macro-economic environment”.

“Experimentation and running with too many things that don’t generate a return is no longer a luxury Amazon can afford,” GlobalData analyst Neil Saunders said.

Amazon’s cost-cut plan mirrors moves by technology giant Meta Platforms Inc, which on Wednesday said it would cut 13% of its workforce, while other tech giants including Alphabet have also paused hiring.

(Reporting by Chavi Mehta and Nivedita Balu in Bengaluru; Editing by Arun Koyyur and Anil D’Silva)

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