I predicted earlier this year that Wal-mart will buy Amazon in 2006, and I’m standing by that prediction. I now have a nearer-term Amazon prediction: Big layoffs.
Tomorrow night’s first-quarter results at Amazon are going to be disappointing, with costs up and earnings down. Analysts are going to get ever-noisier about the absence of leverage in the Amazon model — costs keep ramping as a fixed-ish percentage of sales, as opposed to flattening and producing prodigious profits — and Amazon will reluctantly come to the conclusion it needs to take some costs out of its model. And those costs are going to come from people — layoffs. Lots of ‘em.
Trust me, it all happens at Amazon in 2006.