Amazon.com, the leading online retailer, is expected to announce imminently a cost-cutting plan which could involve significant job losses.
Rumours that Amazon would cut as many as 20% of its 9,000-strong worldwide workforce have spread through the company's Seattle headquarters and internet chatrooms in the past few days.
Few analysts expect the cuts to be as deep as feared, however. The company sacked 150 people a year ago, its first ever round of job cuts.
Bill Curry, a spokesman for Amazon, declined to comment before the release of fourth-quarter results last night. "We never respond to rumours about what may or may not happen," he said. The company demanded that one newswire retract a story that it had denied the job cuts.
Several Wall Street analysts expected the company to announce cost-cutting measures at the same time as lower revenues for the current year. Jeetil Patel, of Deutsche Bank Alex Brown, said Amazon needed to cut operating expenses to reach profitability by 2002. "The deeper the operat ing expense reductions, the better they will be regarded by Wall Street," he said.
Amazon could also cut certain product lines and close some of its eight distribution facilities in the US, he said. However, such retrenchment would represent a significant shift from the company's much-vaunted business model, which reinvests any funding in further expansion.
The job cuts, if announced, are expected to focus on distribution centres in the US as well as other back-office functions. Tim Albright, analyst at Salomon Smith Barney, said: "There are a lot of temporary employees whose jobs won't be around in the next six months."
Since the 150 job cuts a year ago, Amazon has reorganised one distribution centre by relocating most of the staff. Several customer service representatives have begun a drive to unionise the company.
The pressure to cut costs reflects the fact that most analysts expect Amazon's 2001 sales to be lower than the $4bn (£2.74bn) they envisaged three months ago. Some analysts have reduced this year's revenue forecasts to between $3.6bn and $3.8bn amid signs of an economic slowdown.
