Tech editor Dan Howley outlines Amazon’s latest cost-cutting guidance, where it may be routing out sources of unprofitability, and looks at recent FTC warnings Twitter has received under Elon Musk’s management.
Video Transcript
SEANA SMITH: Amazon one of the standouts today. That stock up more than 11%. The move coming after CEO Andy Jassy reportedly leading a cost-cutting review of the company.
Yahoo Finance tech reporter Dan Howley is here with more on this. And, Dan, I guess how large could these cuts potentially be?
DAN HOWLEY: Yeah, these could be large-scale cuts. We know that they’re already trying to trim down the amount of warehouse space they have. They’re trying to lease out some of those facilities, even cut back on plans to build new ones. That is prior to what we’re hearing now.
And so these cuts could be on the scale of just corporate teams. We do have, obviously, interest in potential cutbacks on the Alexa side of things, which loses money for them because they just want to get the hardware in your house so you start talking to Alexa and then sign up for Prime. So that’s a loss leader for them.
We have some quotes though from spokespeople at Amazon basically saying, “Our senior leadership team regularly reviews our investment outlook and financial performance, including as part of our annual operating plan review, which occurs in the fall each year. As part of this year’s review, we’re of course taking into account the current macro-environment and considering opportunities to optimize costs.”
We also have them discussing Alexa, which they said came about less than 10 years ago, that it was a piece of AI, and that they have interest in continuing to invest in Alexa, but their own hardware has always been a loss leader for them. You can have as many Echos out there as you want, but if you’re not charging enough for them and the idea is to just get more people to sign up for Amazon, it’s not going to do much for you.
So, you know, I think we’re going to start to see additional kind of cost-cutting there, potentially from their warehouses. But if you look at something like Thursday Night Football, they’re obviously not going to cut that. That gets more people in Prime Video. That’s a huge opportunity for them, so they’re not going to cut things there either. And they just made Amazon Music more widely available. So it’s about trying to get more people into Prime without also having to spend so much money on that.
RACHELLE AKUFFO: And staying in tech, obviously, struggles at Twitter don’t seem to be going away. They’re always making headlines it seems these days. So what’s the latest now, Dan?
DAN HOWLEY: Yeah, so now we have pushback from the FTC with regards to Elon Musk. Obviously, we’ve had a lot of advertisers saying that they want to pull out from the platform. But, now, the FTC is coming forward. This is after the different reports that Elon Musk wants to change the verification process, paying for verifications. We saw, the other day, some people make new accounts and then get them verified and then try to pass themselves off as, you know, Nintendo of America’s official account, LeBron James’ official account. So there’s been a number of these.
So the FTC has said, “We are tracking recent developments at Twitter with deep concern. No CEO or company is above the law, and companies must follow our consent decrees. Our revised consent order gives us new tools to ensure compliance, and we are prepared to use them.”
Now, this is referring to a consent decree from 2011 that Twitter had agreed to enter into which bars the company from misleading users with regards to how safe their data is on the platform for 20 years. Each violation could cost $16,000. Now, how many users does Twitter have? 300-plus million. That adds up to a lot of money.
SEANA SMITH: It certainly does for a company that’s trying to cut costs at this point. All right, Dan Howley, thanks so much.
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