Amazon Reports Almost No Profit and Slowing Growth

Amazon’s cloud business grew 20 percent to $21.4 billion, its slowest growth on record, and the segment’s operating profit fell slightly, to $5.2 billion.

A key selling point for cloud computing is the ability to quickly reduce costs as demand or needs change, and “we are going to help our customers find a way to spend less money” and run their technology more efficiently, Mr. Jassy said. Business customers are acting cautiously, he said, adding, “You see it with virtually every enterprise, and we’re being very thoughtful about streamlining our costs as well.”

Brian Olsavsky, the company’s finance chief, said on a call with reporters that customers were still signing deals, but “we do expect to see some slower growth rates for the next few quarters.”

Consumers’ struggles with inflation and rising interest rates showed up in Amazon’s retail business. The profitable advertising unit saw sales grow 19 percent to $11.6 billion. But Amazon’s core e-commerce business of selling products directly to consumers was down 2 percent to $64.5 billion. The services it offers to third-party sellers, which provide 59 percent of products sold, was up 20 percent to $36.3 billion.

Mr. Olsavsky said customers spent less on discretionary products and favored lower-priced items and value brands. He said that the company was happy with how the quarter went, given the overall economy. “We’re just cautiously optimistic as we move into 2023 because we know that some of that is holiday demand that people won’t cut back on,” he said.

Mr. Olsavsky said some of the efforts over the past year to run its fulfillment and delivery operations more efficiently have been showing results, with the company more likely to have “right labor, in the right place, at the right time” to meet consumer demand.

Some cost-cutting efforts have short-term expenses, including $640 million in severance costs for corporate and tech workers and $720 million to reduce where it operates grocery stores and Amazon Go markets.

Article source: https://www.nytimes.com/2023/02/02/business/amazon-earnings.html