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Amazon freezes hiring

Amazon is taking cover and implementing a hiring freeze for the current year as reported by the New York Times, the strong dollar looms as a guillotine on top of inflation, the geopolitical situation and rising energy and commodity prices.

Amazon prepares for tougher times

In an increasingly adrift world where very dangerous winds of war are beginning to come from many quarters and not just between Russia and Ukraine (see the tensions over Taiwan and Kim Jong Un’s recent actions) and with the onset of a global recession drawing ever closer, the major companies that are suffering so much from this macro environment and the ongoing bear market are beginning to protect themselves by starting with personnel.

A strong dollar gaining on all other major currencies (Pound Sterling, Euro, Yen, Yuan, etc.) is a problem for exports and AMZN being a global giant the estimates are at least a 5% impact on earnings.

5% on a Q2 that had recorded $121,234 million in sales and a Q3 forecast (coming 27 October) of $127,856 million may have a negative impact to the tune of US$6,000 to US$6,400 million, and this paired in particular with the high energy price means that certain choices are inevitable.

One of the most impacting expenses on a company’s balance sheet, especially if it boasts the size of Bezos’ behemoth, is precisely the workforce, which despite its virtuosity sees it making the decision to stop new hires and optimize results with the company’s existing employees.

This choice is just one in a series of steps taken preemptively by Jeff Bezos to continue to hit the company’s goals and not miss the quarterly earnings report that looms in about 20 days.

Going off the rails would result in negative sentiment from analysts and drive the stock into the red on Wall Street, resulting in economic losses from investors.

The gross operating margin (EBITDA) after a setback in the first quarter, partly due to the aftermath of the Russian invasion in Ukraine, in the second quarter revisited the green zone recording $18,210 million with +13% over expectations and in Bellevue they are trying hard to confirm the trend also in the next Q3.

Not only Amazon, other big companies also cut costs

Amazon’s move is not the only one in the area of HR (Human Resources), even Tesla already months ago had blocked hiring, claiming that a 10% cut in staffing was necessary, except that it later adjusted its focus.

As usual, the cut communicated in a tweet by the always surprising Elon Musk had upset most people and eventually, the Tesla founder was forced to retrace his steps.

In the meantime, good news also comes from the antitrust court, which annulled the massive fine of more than €100 million, €114,681,657 to be precise, imposed on the company and Apple by the Antitrust Authority in November 2021 for an anti-competitive understanding.

The Tar explained that.

“This is the sanction that concerned a clause of the contract signed between Apple and Amazon in 2018, which had reserved the sale of Apple / Beats products (Apple products), through the marketplace, of Amazon to the so-called Apple Premium Resellers (the category of resellers which, within the Apple distribution system, meets the highest standards of quality and investments).”

The fine was overturned to the joy of the American company, which issued the following statement:

“We welcome the decision of the Regional Administrative Court. Our business model across Europe is built on the success of small and medium-sized businesses and we will continue to work hard to deliver a broad selection of Apple products, the quality of service and convenience that our customers love.”

George Michael Belardinelli
George Michael Belardinelli
A former corporate manager at Carifac Spa and later at Veneto Banca Scpa, blogger and Rhumière, over the years he has become passionate about philosophy and the opportunities that innovation and the media make available to us, in particular the metaverse and augmented reality