The Wall Street Journal reported on Thursday that Amazon.com Inc. is reviewing its unprofitable businesses, including the devices division that houses voice assistant Alexa, in order to reduce costs. This news caused its shares to increase by 11%.
After conducting a months-long review, Amazon has instructed some employees to seek employment elsewhere within the organization, while also taking steps to redeploy staff from specific teams to more profitable areas and closing teams in industries like robotics and retail, according to the WSJ.
According to the report, Amazon is closely examining its Alexa business and is currently debating whether it should concentrate on attempting to add new capabilities to the voice assistant, which is already present on a number of Amazon devices.
According to the report, many customers only use the device for a small number of functions, making adding capabilities more expensive.
According to documents cited by the WSJ, the company that houses Alexa has an operating loss of more than $5 billion annually.
“We’re of course taking into account the current macro-environment and considering opportunities to optimize costs,” Amazon spokesperson Brad Glasser said.
According to Glasser, the company is “optimistic about Alexa’s future” because it is still a significant source of revenue and investment for Amazon.
The announcement comes shortly after Amazon issued a growth warning for the busy holiday season, when it generates the most sales, claiming that consumers and businesses were less willing to spend due to inflation.
Amazon announced last week that it would stop hiring for corporate positions for the upcoming few months due to a “unusual macroeconomic 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-cutting strategy is similar to that of technology behemoth Meta Platforms Inc., which announced on Wednesday that it would reduce its workforce by 13%. Other tech behemoths like Alphabet have also halted hiring.
\(Adapted from USNews.com)