Amazon's Horrible CEO Guts Thousands

The Inc. (NASDAQ: AMZN) board should have known Chief Executive Officer Andy Jassy was the wrong person to take the job within days of when he moved into the corner office. The former chief of the highly profitable Amazon Web Services could not get his hands around the larger e-commerce business. This will cost thousands of Amazon workers their jobs, and he will keep his.

The parts of Amazon that will be hit are critical to its retail efforts. These include those in the consumer electronics and retail businesses. The strategy of culling projects like Alexa is dangerous because they give Amazon a distinct sales advantage against other retailers, even though it loses money.

Like many other flat-footed chief executives, Jassy did not see the downturn coming. He also missed what would be the critical transition from a COVID-19-driven economy to one where most Americans do not fear for their daily health. Amazon became overbuilt and did not create a plastic process to mold itself to the economy as it changed.

Some of the problems Amazon has had belong to founder Jeff Bezos. He not only picked Jassy. He also has allowed him to make a series of mistakes that were not necessary.

Wall Street lost confidence in Jassy several months ago. The market is off 28% this year, and Amazon is down 43%. Investors are rarely wrong about companies as huge as Amazon. There are too many eyes on every part of the company to miss substantial trouble.

Amazon remains one of America’s great companies and among the most important ones founded in the past half-century. It turned the entire retail industry upside down. Walmart is the only brick-and-mortar retailer that still competes with it on an equal footing.

The undermining of the success of Amazon’s e-commerce business leaves it vulnerable to becoming a one-division company, at least in terms of operating income. AWS should not have to carry that much water.

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