Blogs and more respected publications such as the New York Times and the Wall Street Journal talk about rumors that battered search engine Yahoo is about to make massive layoffs. Some sources tout numbers as large as 2,500. Is there any truth behind these rumors? And what are the implications?
Let’s address the first question first. I don’t know anyone willing to give me inside information at Yahoo, regardless of whether I use names. But I do read a lot, and I do have a certain sense of history. I distinctly remember when Jerry Yang, Yahoo’s co-founder, took the CEO slot away from Terry Semel in June of 2007. At that time he said he’d spend “the next 100 days or so focused on mapping out a strategic plan for the long-term success, working with our teams to put the right organization and the right people in place, and making any necessary changes.”
Those 100 days would have been up right around the time of Yahoo’s Q3 2007 earnings announcement. While Yahoo did deliver a solid quarter, it apparently wasn’t good enough for Wall Street. Net income for the quarter was $0.11 per share – exactly the same as the net income for the same period in 2006, when Terry Semel was still in power as CEO. It was as if Yahoo was simply delivering more of the same, even after the management changes (more than 17 executives at the vice president level or higher have left Yahoo since December 2006).
“More of the same” is not going to get Yahoo out of the fix it’s in. Henry Blodget of Silicon Alley Insider was predicting at the end of October last year that “Yahoo may have to lay off about 1,200 people.” Back then Blodget cited several years of recovery from the first dot-com bubble and an increasing stock price running headlong into “the Google juggernaut,” which “gobbled up much of Yahoo’s market share.” So if those layoffs actually happen, at least one person can say he saw it coming for months.
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