Bulletins

Amazon issues gloomy outlook with supply-chain issues, labor shortages

Jassy said the company expects to incur "several billion dollars" in additional costs to contend with the labor shortages and supply chain issues, among other challenges.

An Amazon warehouse worker

Amazon's fourth quarter will be more challenging than expected as supply-chain issues linger.

Photo: Amazon

Andy Jassy's tenure as CEO is off to a rocky start, at least by Amazon's standards.

Jassy issued a stark warning during the company's third-quarter earnings call on Thursday: "In the fourth quarter, we expect to incur several billion dollars of additional costs in our consumer business as we manage through labor supply shortages, increased wage costs, global supply chain issues, and increased freight and shipping costs—all while doing whatever it takes to minimize the impact on customers and selling partners this holiday season. It'll be expensive for us in the short term, but it's the right prioritization for our customers and partners."

That pronouncement came on the heels of Amazon disclosing a relatively disappointing third quarter during which its net income decreased by nearly half, from $6.3 billion in Q3 2020 to $3.2 billion in Q3 2021.

Overall revenue increased 15% year-over-year to reach $110.8 billion. AWS helped drive this growth, with its growth rate increasing to 39% year-over-year.

Amazon said it expects to generate revenue between $130 billion to $140 billion in the upcoming quarter, which would still represent a year-over-year growth of 4-12%.

Hirsh Chitkara

Hirsh Chitkara ( @HirshChitkara) is a reporter at Protocol focused on the intersection of politics, technology and society. Before joining Protocol, he helped write a daily newsletter at Insider that covered all things Big Tech. He's based in New York and can be reached at hchitkara@protocol.com.

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