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Yahoo layoffs, possibly this month, could reach thousands, report saysMar 06, 2012 (San Jose Mercury News - McClatchy-Tribune Information Services via COMTEX) -- Yahoo (YHOO) CEO Scott Thompson may be close to announcing a major reorganization and sizable layoffs at the Sunnyvale Internet company, which has been grappling with falling revenue, dissident investors and a changing Internet landscape. Thompson's plans could lead to thousands of layoffs being announced in coming weeks, according to two news reports Monday that cited unnamed sources. But analysts warn that cutbacks alone won't solve the company's problems. "I wouldn't say there is fat to be cut. I would say there has to be a transformation of the company," said Ben Schachter, who follows Internet companies for Macquarie Equities Research. "They cannot continue to conduct business as they have for the last 10 years." After previous Yahoo chiefs failed to recognize the rise of social networking and mobile Web browsing, Schachter said, Thompson, who was named CEO in January, must "change the strategic goals and focus on big growth opportunities," rather than "tweak things and make small changes." Thompson has hinted at big plans, though he has not offered many details. He said in January that he wants to develop new ways for Yahoo to make money by, for example, building mobile services and capitalizing on the vast amount of data that Yahoo has compiled on Web traffic and customer interests. He also promised Wall Street analysts that he would be "aggressive" in evaluating "all options" for the company, including shifting resources to new initiatives. "We'll consider revenue streams that look different from what we're doing today," Thompson said at the company's most recent earnings announcement. "As a result, there will be some things that we stop doing." Market share shrinks A Yahoo spokeswoman would not confirm the layoff reports or elaborate on Thompson's plans Monday, beyond a brief statement that said: "As we have indicated, our leadership is engaged in a process that will generate significant strategic change at Yahoo, but final decisions have not yet been made at this point." Yahoo is profitable, and its websites are still popular, but the company has seen its revenue and market share decline in recent years as newer competitors such as Google (GOOG) and Facebook have emerged to dominate the online advertising market. Yahoo reported $1 billion in net income on roughly $5 billion in revenue last year, down from $1.2 billion profit on $6.3 billion in revenue for 2010. Thompson was hired after Yahoo's board fired CEO Carol Bartz, who was unsuccessful in her own effort to turn around the struggling company. Yahoo currently has about 14,100 employees worldwide; the extent of potential job cuts is unclear. The industry blog All Things D said Monday that Yahoo is preparing for layoffs "that could number in the thousands" -- and which may be announced by the end of this month, when the current financial quarter will close. The blog, which cited sources inside and outside the company, has accurately reported on other recent Yahoo developments before they were announced. It said Monday that cuts are being considered for Yahoo's products department as well as marketing, research and less successful business efforts. Bloomberg News reported later Monday that a "person familiar with the matter" had confirmed Yahoo is considering significant staff cuts. A big layoff would most likely have a sizable impact on Yahoo's Silicon Valley workforce. In a report in the summer, Sunnyvale officials estimated 4,900 Yahoo employees were based at the company's headquarters there, or more than a third of the current workforce. A Yahoo representative said the company doesn't disclose employee counts by location, but added that the current number in Sunnyvale is lower than the city's estimate. Before hiring Thompson, Yahoo's board also launched negotiations to sell company holdings in two Asian Internet companies, Alibaba and Yahoo Japan. Experts say those sales could produce billions in cash for Yahoo to invest in new business or to appease long-suffering investors with a special dividend. But the talks appear to have stalled in recent weeks. Board challenge Thompson also moved last month to confront Facebook with a demand that the social networking giant pay fees for using Web technology that allegedly infringes on Yahoo patents. While the demand could lead to a lucrative licensing deal for Yahoo, the outcome is uncertain. Meanwhile, dissident investor Daniel Loeb has announced plans to run his own slate of four candidates for Yahoo's board. Yahoo announced recently that five longtime directors, including co-founder Jerry Yang and Chairman Roy Bostock, would step down. But Loeb, whose Third Point investment firm controls 5.6 percent of Yahoo's stock, has said he lacks confidence in the remaining board members. Shares in Yahoo closed Monday at $14.62, down 0.7 percent for the day and off more than 20 percent from a high of $18.84 reached in the spring. Contact Brandon Bailey at [email protected]. Follow him at Twitter.com/brandonbailey. RECENT LAYOFFS AT YAHOO January 2011: Yahoo says it will cut 100 to 150 jobs, roughly 1 percent of a workforce that totaled 13,600. December 2010: Yahoo lays off 600 employees after lackluster growth. April 2009: Yahoo says it will cut 700 jobs or about 5 percent of its workforce. December 2008: Yahoo lays off 1,500 people, about 10 percent of its workforce, after sales declined for the third consecutive quarter. Source: Staff research ___ (c)2012 the San Jose Mercury News (San Jose, Calif.) Visit the San Jose Mercury News (San Jose, Calif.) at www.mercurynews.com Distributed by MCT Information Services |