Yahoo Layoffs: This Could Get Ugly - Where Will the Cuts Fall?
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If we take it as a foregone conclusion that this is no mere rumor and the cuts are real, we have to ask how they will be applied across the company. Will they be made in an even-handed way, with each part of the company losing some people? Or will some parts lose more than others, with certain Yahoo operations perhaps losing everyone and closing their doors? And how will the struggling search engine allocate its remaining resources?
Henry Blodget claims that there is a list of people who will be laid off. He stated in his blog that the list “is reportedly the product of a Q4 project in which all group heads were asked to look at redundancies and create their own lists of potential cuts. All the group-level lists have now been turned in to corporate.” If this is what actually happened, then the cuts might happen in a relatively even-handed manner (though not from the point of view of those receiving pink slips!), with every portion of the search engine experiencing significant but not drastic cuts.
Meanwhile, observers of Yahoo’s plight are not above making their own suggestions as to where the cuts should come. Peter Kafka, writing for Silicon Alley Insider, cites one Silicon Alley executive as thinking that Yahoo’s cuts should “be focused in one particular area – [Yahoo’s] paid search business.” The executive thinks that Yahoo will never be able to make up ground against Google in search ads, so they should find other ways to capitalize on their huge brand and audience.
Blodget, meanwhile, thinks that the cuts should be made in Yahoo’s U.S. work force “because it is the U.S. operating margin that has deteriorated.” But Rafat Ali, writing for PaidContent.org, thinks that a lot of the layoffs will come from some European units. He cited a Financial Times story in which Toby Coppel, head of Yahoo’s European business, sounded “an ominous warning…Yahoo staff was given until Q1 2008 to revamp the poorly performing parts of its European business, or these would be closed down or sold.” Ali further stated that the FT story suggested the search engine might outsource some European search operations to third parties.
So where will Yahoo allocate its newly-reduced resources? The New York Times article on the subject said that the search engine was likely to keep or grow its investments in Internet search, e-mail, its front page and personalized home page service (MyYahoo). News, finance and sports would also remain. But the Times noted that Yahoo revealed plans in recent months to phase out or consolidate certain services. These included photos, premium music, auctions and its not-quite-popular-enough social network, Yahoo 360.
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