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2HRS2GO: A little nervousness about Amazon firings

5 min read

Should we make much of layoffs at Amazon.com (Nasdaq: AMZN)?

After all, 150 people out of 7,500 isn't much, so it's not like we're talking about massive cost-cutting at Amazon.com. The company says it's still growing and hiring.



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But job cuts of any sort make people wonder if the company is managing its expansion efficiently. Amazon.com is growing, why couldn't it find other spots for these folks? Since the company won't provide many details, we're left to speculate.

Amazon says its strategy remains the same, which doesn't exactly reassure folks who (rightly or wrongly) perceive Amazon's strategy as "Lose a boatload of money until your competitors cry 'Uncle!' and run away." If this past year is any indication, Amazon.com shares won't hit new heights until this company turns a profit.

So should we make much of layoffs? No. But it has to make you feel a bit queasier about Jeff Bezos' dream.

  • Someone wanted to know what I thought of the ZDNet (Nasdaq: ZDZ) news. Hey, don't ask me, I only work here.

  • A pair of rookies and a veteran today exemplify the market's gluttony for wireless anything. On one end, you've got Swedish handset maker LM Ericsson (Nasdaq: ERICY) storming higher after dancing past analyst forecasts and predicting a rosier year ahead. Ericsson's handset sales laid waste to expectations -- 33 percent growth compared to at least one analyst's prediction of just 5 to 6 percent.

    At the other end from Ericsson's broad shoulders stand two newly public companies, including Interwave Communications (Nasdaq: IWAV), whose WAVEXpress systems provide wireless capabilities under the GSM standard. It's easy enough to understand the enthusiasm for Interwave, given the demand for wireless infrastructure these days.

    More difficult to comprehend is the pop for today's hottest offering, 724 Solutions (Nasdaq: SVNX), a Canadian provider of wireless technology for financial institutions. (How come everyone in the finance industry is an "institution" while outfits in every other industry are just "companies"? Aren't the likes of IBM or Sears, Roebuck & Co. as much institutions as Chase or Bank of America?)

    724 Solutions rose like a missile in this morning's public debut, but I wonder if much of that isn't merely fueled by pent-up demand for initial public offerings? Until this week, there hadn't been a hot buzzword IPO in awhile.

    I find it hard to believe people are that excited about the potential for a one-product niche company like 724, whose technology lets banks and their ilk offer online services to wireless devices. Yes, it's a nice idea with very few companies pursuing it at the moment. But it's not as if we're looking at unbelievably huge markets like the ones addressed by some of last year's hot IPOs, such as Redback Networks (Nasdaq: RBAK) and Juniper Networks (Nasdaq: JNPR), or Webvan (Nasdaq: WBVN), which also has a big-name CEO in George Shaheen and the advantage of some unlikely publicity from the SEC. Even Linux operations like VA Linux (Nasdaq: LNUX) or Red Hat (Nasdaq: RHAT) at least carry the potential of a broader constituency.

    Oh well. At least the IPO flippers are finally having fun again.

  • On the other hand, you can always point to the continuing freefall of Qualcomm (Nasdaq: QCOM) -- down 9 percent today, on top of losses earlier this week -- as proof the market isn't completely sold on wireless. But Qualcomm stock had run way (way, way, way, way) ahead of itself, so even the slightest tremor was going to shake a lot of fruit off the tree.

    Perhaps a bigger problem might be that CDMA isn't the only standard out there, popular though it may be. If you look at another industry (computer operating systems, for example), it's evident that even a dominant technology (say, Windows) leaves plenty of room for other plays (see Unix and all its variants including Linux).

    It's also theoretically possible to work around Qualcomm's patents, much in the same way that people have produced Windows emulators or Intel-compatible chips. All it takes is a better idea or a good one that's cheaper.

  • The most telling sign of the flameout for theglobe.com (Nasdaq: TGLO) isn't so much the departure of its founders as co-CEOs, but the market's reaction. As of late morning, the Web community operator's stock had seen relatively modest volume of less than 400,000 shares, which indicates few people care anymore.

    I'm a bit surprised the resignations of Stephan Paternot and Todd Krizelman didn't give the stock a small boost, because they clearly had no cachet with Wall Street and were in over their heads as executives. Think of them as affirmations of conventional wisdom that says founders often make bad CEOs of public companies.

    For every Bill Gates, Larry Ellison or Scott McNealy, you've got a bunch of Paternots and Krizelmans. And remember Microsoft (Nasdaq: MSFT) and Oracle (Nasdaq: ORCL) each remained private companies for more than a decade, and Sun Microsystems (Nasdaq: SUNW) wasn't publicly traded until roughly five years after being incorporated, so their founders were experienced executives by the time they were selling stock.

    Nowadays the jacked-up speed of the Internet usually doesn't give companies the luxury of working out their kinks privately. In many cases, you have to be publicly-held to be considered a major player. Yet even more recent success stories such as Yahoo! (Nasdaq: YHOO) or Inktomi (Nasdaq: INKT) are led by men who were brought in from the outside.

    That doesn't always work either, as Netscape employees or Sculley-era Apple veterans can testify. But in a world of me-too lookalike products and services like the Web community market that includes theglobe.com, a dash of professionalism could have helped a lot. As it stands now, theglobe.com's most visible pro comes via the official website of Miami Dolphins quarterback Dan Marino. And he might retire soon. 22GO>