Amazon Announces Job Cuts, Narrower Q4 loss
Internet retail giant Amazon.com posted a reduced quarterly loss today, just beating Wall Street estimates, but said it would cut 15 percent of its workforce, 1,300 employees, and take a restructuring charge of more than $150 million.
Amazon, which sells everything from books to electronics to hardware at its online store, said it would cut 1,300 jobs, closing a distribution center in McDonough, Georgia, and its customer service center in Seattle. It also said it would operate its Seattle distribution center only seasonally.
The company statement gave no immediate reason for the restructuring, but analysts had expected the move because of continued losses by the company, which is under pressure from investors to turn a profit, and because of a disappointing holiday sales season.
For the three months ended Dec. 31, its pro forma net loss was $90.4 million, or 25 cents a share, compared with $184.9 million, or 55 cents, a year earlier. Wall Street analysts tracked by First Call/Thomson Financial had expected Amazon to lose 26 cents a share.
Amazon shares closed at $18-15/16, down $1-3/16, or 5.9 percent, on Nasdaq before the announcement.
Amazon said quarterly revenues of $972 million were up 44 percent from $676 million a year earlier. That was more than the company's recent forecast of $960 million.
Earlier this month, Amazon said it had slashed its year-end inventory balance by 20 percent to less than $175 million. Analysts have said the 5-year-old company is relatively inexperienced at stocking the right mix of goods.
Analysts viewed the holiday quarter as a crucial time for Amazon to prove its growth first, profits later strategy could work. The company has expanded beyond its core books business into music, software, hardware and even lawn furniture.
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Higher Medical Costs Hurt Aetna
Aetna, the largest U.S. health insurer, said today fourth-quarter earnings from continuing operations fell 65 percent percent, as higher medical costs cut into profits.
Hartford, Conn.-based Aetna, which has about 19 million health-care members in the United States, said fourth-quarter earnings from continuing operations dropped to $28.7 million, or 20 cents a share, following the recent divestiture of its financial services and international segments. That compares with operating earnings of $81 million, or 55 cents a share, in the same period a year ago.
The latest quarter's results beat analysts' consensus forecast of 16 cents, according to First Call/Thomson Financial. First Call said the forecast excluded Aetna's financial services and international businesses, as well as securities gains and losses.
Aetna's medical loss ratio — a crucial industry measurement that compares medical costs such as paying doctors and hospitals against revenues — in its commercial health maintenance organization, or HMO, business rose to 87.2 percent in the quarter. The company's total revenues fell about one percent to $6.6 billion.
Aetna's stock has underperformed the Standard & Poor's Health Care Managed Care index by more than 55 percent in the past year.