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April 04, 2012

Yahoo Plans Big Job Cuts In Hopes of Big Savings

By Steve Anderson, Contributing TMCnet Writer

Yahoo's fortunes of late have not been good. With Facebook (News - Alert) suing them over a series of what it calls infringed patents – Yahoo, however, is also suing Facebook for what it calls the same thing – and its traffic numbers on the decline against rival search titan Google (News - Alert), Yahoo has turned to one of the last places it has left to save money: payroll.



Yahoo has a plan in place to cut fully 2,000 jobs in a bid to recover the web giant's former glory, and the 2,000 lost jobs look to save it fully $375 million annually. This will no doubt come as a surprise to many, as that would mean that the jobs annually cost the company, on average, $187,500 each per year. Moreover, some reports suggest that this isn't the end of the cutting session either, but rather only the beginning.

Further rounds of job cuts may follow this one, which was actually rumored to happen back in March. Of course, the costs of a job are more than just salary – factoring in benefits and facilities costs boost the numbers substantially – though some have pointed to the impressive numbers being paid Scott Thompson's way to sign on as Yahoo's new CEO following the controversial departure of Carol Bartz (News - Alert), and wondered if maybe Yahoo doesn't really have its priorities straight.

Recent news items have led some to wonder if Yahoo isn't preparing itself for a sale, and internal pressures from investor Third Point LLC may lead to a proxy fight down the line, one Thompson is likely eager to avoid. Moves like this may convince the other shareholders that Third Point's board of directors ambitions are misplaced; Third Point wants to seat four of its own picks on the Yahoo board to replace four vacated seats, including that of recently-departed chairman Roy Bostock.

There's more than enough speculation surrounding a big move like this, and the human cost in job losses is too massive to easily ignore. But it's quite clear that Yahoo won't be going down without a fight, and the hardest such fight it can bring to bear.






Edited by Jennifer Russell
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