Amazon Resorts To Selling Bay Area Offices To Cut Costs; Announces Biggest Layoffs In Its History And Freezes Corporate Hiring Citing Economic Uncertainties.
Amazon is tightening its belt and announces a slew of measures to tide over economic recession concerns; its property is located in Milpitas, California.
E-commerce giant Amazon will reportedly offload an office complex in the Bay Area of Northern California; the almost 29-acre site is located in Milpitas, a city between Fremont and San Jose in California.
Amazon had reportedly bought the property for over $120 million in 2021 during the second year of the COVID-19 pandemic; Amazon spokesperson Steve Kelly told a leading business channel on Friday that the company is “always evaluating our network to make sure it fits our business needs.”
He informed that as part of the effort, Amazon has decided to explore selling the Metro Corporate Center site; however, he reiterated that the company was happy to remain part of the local community and will continue to deliver for customers from its two delivery stations in Milpitas.
The buyer of the empty complex is reportedly developer Dermody Properties, which plans to make it a warehouse, and the property was under contract with an anticipated close date in April; the building is said to be one of only eight modern, Class-A warehouses larger than 400,000 square feet serving the Bay Area.”
Not Just One But Many
According to local reports, in January, Amazon also opened new sites in Sioux Falls, South Dakota, and another in Papillion, Nebraska.
Further, in November, a same-day shipping facility for Amazon also reportedly opened in Northern California.
Profit Woes
In late October, Amazon said it generated $127.1 billion in net sales for the third quarter, a 15% increase from the same three-month period the prior year. The company’s quarterly net income was $2.9 billion, dropping nearly 9% year-over-year.
Amazon shares were trading at roughly $102 Friday afternoon, up over 19% from the start of 2023 but down nearly 29% over the past year.
Amazon begins its biggest layoffs ever.
Meanwhile, Amazon had also announced to lay off nearly 18,000 employees, although it is just a fraction of its 1.5M global workforce; the workforce reduction, which is the largest in its history.
Amazon CEO Andy Jassy broke the news to employees in a blog post that the company was laying off about 18,000 people as it aims to cut costs and would begin contacting the impacted employees on Jan. 18.
In his words, “Amazon has weathered uncertain and difficult economies in the past, and we will continue to do so,” Jassy said in the Jan. 4 post. “These changes will enable us to pursue our long-term opportunities with a stronger cost structure.”
The layoffs are a part of the company’s ongoing annual operative review will mainly impact the company’s Amazon Stores division — which encompasses its e-commerce business and brick-and-mortar stores — and its PXT organizations, which handle human resources and other functions.
Jassy first warned employees in November that layoffs were on the horizon given the uncertain economy and the fact that the company rapidly hired over the pandemic.
In the Nov. 17 post, Jassy told employees that Amazon had decided to eliminate several positions across its devices and books businesses. He also announced a voluntary reduction offer for some employees in its PXT organization.
As part of the company’s annual operating planning review, Amazon is looking at each of its businesses to see what changes need to be made for the business’s long-term health.
However, Jassy also warned that there would be more role reductions in early 2023 as part of this annual planning process.
Amazon halts corporate hiring citing ‘uncertain’ economy.
Meanwhile, Amazon said it expects the hiring freeze for corporate positions this week, pointing to the “uncertain: economy as the reason behind the move likely to last through the end of the year.
In a message to employees, Amazon senior vice president of People Experience and Technology Beth Galetti announced the decision made by CEO Andy Jassy and the leadership team, explaining, “We’re facing an unusual macro-economic environment, and want to balance our hiring and investments with being thoughtful about this economy.”
Galetti noted that the company had already announced hiring pauses in some divisions in recent weeks and also decided to clamp on fresh corporate hiring across the board “with the economy in uncertainty and since many people, we have hired in the last few years.”
The retail giant plans to keep the hiring freeze in place for a few months.
Galetti told workers in her message that Amazon has faced harsh economic conditions in the past, adding, “With fewer people to hire in the present, this should give each team an opportunity to further prioritize what matters most to customers and the business, and to be more productive.”
The announcement came two weeks after Amazon founder and former CEO Jeff Bezos cautioned on Twitter that “the probabilities in this economy tell you to batten down the hatches,” suggesting he agreed with Goldman Sachs CEO David Solomon who had cautioned earlier in the day that there is a “good chance” of a U.S. recession.
Amazon’s hiring pause is the latest indication of big tech anticipating an economic downturn. Microsoft recently reported layoffs across several divisions, and Meta implemented its own hiring freeze in late September.
