Amazon CEO's letter to shareholders makes 5 claims on layoffs, AWS, AI, and more

Amazon Chief Executive Officer Andy Jassy's 2022 letter to shareholders was posted on the e-commerce giant's blogpost on Thursday. In letter Jassy wrote, “there are a number of other changes that we’ve made over the last several months to streamline our overall costs, and like most leadership teams, we’ll continue to evaluate what we’re seeing in our business and proceed adaptively."

In the letter, Jassy described 2022 as “one of the harder macroeconomic years in recent memory” and detailed the steps Amazon had taken to trim costs, such as shuttering its health care initiative Amazon Care and some stores across the country.

Despite the cuts and “turbulent” times, Jassy said he strongly believes Amazon's “best days are in front of us.”

Meanwhile, Amazon will also shut down global online bookstore Book Depository after almost two decades. 

The UK-based bookseller, bought by Amazon in 2011, announced Wednesday that it would cease operations on April 26, but that customers could still place orders until midday UK time on that day.

27,000 roles in Amazon laid-off

In January, Amazon said it would lay off 18,000 employees. In March Amazon disclosed it will be cutting a total of 9,000 employees by the end of April. The cuts will primarily come from its AWS, PXT, advertising and Twitch organizations.

“We took a deep look across the company, business by business, invention by invention, and asked ourselves whether we had conviction about each initiative’s long-term potential to drive enough revenue, operating income, free cash flow, and return on invested capital,” said Jassy. “In some cases, it led to us shuttering certain businesses.”

“We also reprioritized where to spend our resources, which ultimately led to the hard decision to eliminate 27,000 corporate roles,” said Jassy.

‘AWS Faces Short-Term Headwinds’

AWS is the worldwide market-share leader in cloud computing with an annual run rate of $85 billion.

The company’s profitable cloud computing unit Amazon Web Services also faces “short-term headwinds right now,” despite growing 29% year-over-year in 2022 on a $62 billion revenue base, Jassy wrote. He noted challenges for the unit stem from companies spending more cautiously in the face of challenging current macroeconomic conditions.

Investing into chips

Jassy said AWS innovation on its general-purpose CPU Graviton processors—including the 2022 launch of its Graviton3 chips—as well as its new training chip Trainium, isn’t stopping.

Amazon’s CEO pointed at its newly launched Inferentia2 chip, which offers up to four times higher throughput and 10 times lower latency than its first Inferentia processor.

The Seattle company will continue to invest in specialized chips most used for machine learning, its advertising business as well as generative AI tools.

The tools are part of a new generation of machine-learning systems that can converse, generate readable text on demand and produce novel images and video based on what they’ve learned from a vast database of digital books and online text.

Amazon ‘investing heavily’ in AI

Andy Jassy signaled confidence that the company will get costs under control in his annual shareholder letter, where he also noted the tech giant was “spending heavily” on AI tools that have gained popularity in recent months.

Amazon also announced several new services that will allow developers to build their own AI tools on its cloud infrastructure.

“Let’s just say that LLMs and Generative AI are going to be a big deal for customers, our shareholders, and Amazon,” Jassy wrote, using the abbreviated version of Large Language Models, or AI that can mimic human writing styles based on data they've ingested.

Cost-Cutting opposed to Cost-Optimizing

Jassy said AWS is not trying to optimize for any quarter or year in particular, but rather build customer relationships and a business “that outlasts all of us.”

“As a result, our AWS sales and support teams are spending much of their time helping customers optimize their AWS spend so they can better weather this uncertain economy. Many of these AWS customers tell us that they’re not cost-cutting as much as cost-optimizing so they can take their resources and apply them to emerging and inventive new customer experiences they’re planning,” said Jassy.

Jassy said he’s seeing an increasing number of “enterprises opting out of managing their own infrastructure and preferring to move to AWS to enjoy the agility, innovation, cost-efficiency, and security benefits.”

(With inputs from agencies)