Yahoo Layoffs: This Could Get Ugly - Yahoo Indicators
(Page 2 of 4 )
There have been tantalizing clues from Yahoo itself that there is something behind the rumors. In a statement, the company said that “Yahoo! has embarked on a multi-year transformation that includes making tough decisions about the business to help the company grow. Yahoo! has focused its efforts to support its strategy to become the indispensable starting point for consumers, advertisers, publishers and developers. Yahoo! plans to invest in some areas, reduce emphasis in others, and eliminate some areas of the business that don’t support the company’s priorities. Yahoo! continues to attract and hire talent against the company’s key initiatives to create long-term stockholder value.”
I’d submit that key phrases like “tough decisions,” “reduce emphasis” and “eliminate some areas” all but scream that layoffs are on the horizon. Clearly, this is more than a rumor. According to most of the articles I’ve read covering it, we’ll know for sure when Yahoo releases its fourth quarter and year-end figures on January 29. Actually, it might take a little longer than that; some observers expect Yahoo to wait and see how Wall Street responds before going ahead with the job cuts.
Wall Street must look pretty scary to Jerry Yang right now. The search engine’s stock has lost more than half of its value since early 2006; recently, it closed at under $21. Sramana Mithra, writing as a guest author for GigaOm, noted that Yahoo has lost about $20 billion in market cap over the last two years. Some observers believe that if Yahoo’s stock drops into the teens, Jerry Yang himself could become vulnerable.
It’s widely perceived that Yang is too nice of a guy to carry out the kind of ruthless job cuts that Yahoo seems to need. But does Yahoo’s “fat” really amount to as much as one-fifth of its work force? Some stories in the press say the numbers will be in the hundreds, not thousands. Others suggest that the number of layoffs need to equal at least 1,000 in order to be meaningful. Erick Schonfeld at TechCrunch calculated that cutting 500 people would only save Yahoo $50 million, while cutting 1,500 would add $150 million to its bottom line – coincidentally, the same amount of money that the company netted in its entire third quarter.
Either way, news of even the possibility of such large layoffs will still have an impact on Yahoo’s 14,000-strong work force. But frankly, Yang might not have much of a choice if he wants to show both Wall Street and those at his own company that he’s tough enough to make the hard decisions and follow through. Some important questions remain, of course.
Next: Where Will the Cuts Fall? >>
More Search Engine News Articles
More By Terri Wells
