1,300 Layoffs From Amazon.com

The poster child of the internet economy is now the latest victim of dot.com downsizing.

Amazon.com announced Tuesday that it would cut 1,300 jobs - 15 percent of its workforce - and close one of the distribution centers it built last year as well as a customer service center. The East Coast customer service center in downtown Huntington will not be affected.  The company said the cuts will allow it to have its first profitable quarter at the end of 2001.
 
Amazon plans to close a distribution center in McDonough, Ga., and keep one in Seattle open only during the holiday season. A customer-service center in Seattle also will be closed. As a result, about 850 people in the Seattle area will lose their jobs and 45 in Georgia.  A unit of the Communications Workers of America, the Washington Alliance of Technology Workers (WashTech), had been attempting to unionize the customer-service center in Seattle that is slated for closure.

Executives said the decision was purely business.

"The reality is that we totally respect the rights of every employee in this company and we will continue to do everything we can to make this a great place to work. The union activities in Seattle had absolutely nothing to do with the decision," Chief Financial Officer Warren Jensen told a conference call. 

Apart from severance packages -- as big as 12 weeks' pay and a $500 bonus for Seattle workers who stay until their very last day -- Amazon said it also set aside $2.5 million of its stock in a trust fund to be paid to laid off workers in two years.

"We've evolved a great deal in five years, and in 2000 we learned a tremendous amount about the operating characteristics of our model, while improving our bottom line each quarter of the year," said Jeff Bezos, Amazon's chief executive officer.

Bezos blamed the layoffs and charges on the weak economy and said that achieving profitability will come via strict spending measures.  Wall Street reacted quickly to the move, cutting the stock by nearly 10 percent to 18.56 after the announcement.   Amazon stock has dropped from a year's high of 85 15/16. 
 
These changes will enable to the company to reach operating profitability - essentially profits from selling its goods online and excluding any one-time charges or write-downs in the value of its assets, including investments - by the fourth quarter of this year, said Warren Jenson, Amazon's chief financial officer.

A story in the San Francisco Chronicle says the dot-com death march quickened its pace in January, with 12,828 Internet workers hitting the bricks.  That's a 23 percent increase from December's total of 10,459 jobs lost, according to the executive recruitment firm Challenger, Gray & Christmas.