Yahoo Employees Bracing for Expected Layoffs

By Chris Preimesberger  |  Posted 2012-03-05 Print this article Print

Analysis: Even casual industry observers know that the Sunnyvale, Calif.-based company has been struggling for more than a decade and is due for streamlining.

Yahoo employees are bracing for a corporate restructuring and a serious round of layoffs, if one believes a report issued March 5 from the Dow Jones IT news site AllThingsD.

Of course, even casual industry observers don't need that report to know that the Sunnyvale, Calif.-based company has been struggling for more than a decade and is due for streamlining. The once-thriving Web services provider saw its co-founder/former CEO/spiritual leader, Jerry Yang, resign last month, along with its board chairman, Roy Bostock, and three other board members.

New CEO Scott Thompson, who jumped from PayPal to become CEO on Jan. 4, is the one who ostensibly will have to do the dirty work of cost- and job-cutting.

A source close to Yahoo told eWEEK that the company already has started the process of laying off employees. The company reported 13,100 full-time employees in 2011, and a high percentage of them may find themselves unemployed by month's end.

AllThingsD said the layoffs will hit Yahoo's large products organization and its marketing/public relations and research operations first. Marginal businesses and weaker regional groups could also be affected, the report said.

Turmoil in Leadership

Since 2007, Yahoo has had four CEOs: former Warner Bros. Chairman and co-CEO Terry Semel (2004-2007), Yang (2007-2009), Autodesk CEO Carol Bartz (2009-2011) and former PayPal President Scott Thompson, hired on Jan. 4, 2012. Semel resigned in 2007, with Yang replacing him. Bartz was fired by Bostock in September 2011.

Turnover in that job alone tells the story of company leadership in turmoil.

The die has been cast since 2008, when Yang, Bostock and a majority of the Yahoo board turned away a $44.6 billion buyout bid from Microsoft, a move that has lived in infamy with many investors€”now mostly former investors€”ever since.

For about seven years, Yahoo ranked as the world's No. 1 Internet search engine. However, Google bypassed it in general usage in about 2002. Facebook, Twitter and other social media services also have taken page views from Yahoo, which is still the No. 2 search provider and whose Yahoo Mail is the world's leading Webmail application.

Yang was a focal point of controversy in 2008 after he persuaded the board to turn down an offer from Microsoft to acquire the company for $44.6 billion, or about $31 a share. Yang feared that a Microsoft takeover would irrevocably damage Yahoo's business model and image.

Buyout a Possibility

It is possible€”more likely, probable€”that Yahoo will tighten its belts and trim headcount in order to make it more attractive to a potential buyer. It's still possible that Microsoft, which licenses Yahoo's IT for its Bing search engine, could be interested. But that $44.6 billion offer from 2008 is now officially a pipe dream, since the company's market cap is estimated at $17.75 billion.

Yahoo's common stock in July 2008 was selling for about $23 per share and had been as high as $33.63 in October 2007. The stock closed at $14.62 on March 5.

Chris Preimesberger Chris Preimesberger was named Editor-in-Chief of Features & Analysis at eWEEK in November 2011. Previously he served eWEEK as Senior Writer, covering a range of IT sectors that include data center systems, cloud computing, storage, virtualization, green IT, e-discovery and IT governance. His blog, Storage Station, is considered a go-to information source. Chris won a national Folio Award for magazine writing in November 2011 for a cover story on and CEO-founder Marc Benioff, and he has served as a judge for the SIIA Codie Awards since 2005. In previous IT journalism, Chris was a founding editor of both IT Manager's Journal and and was managing editor of Software Development magazine. His diverse resume also includes: sportswriter for the Los Angeles Daily News, covering NCAA and NBA basketball, television critic for the Palo Alto Times Tribune, and Sports Information Director at Stanford University. He has served as a correspondent for The Associated Press, covering Stanford and NCAA tournament basketball, since 1983. He has covered a number of major events, including the 1984 Democratic National Convention, a Presidential press conference at the White House in 1993, the Emmy Awards (three times), two Rose Bowls, the Fiesta Bowl, several NCAA men's and women's basketball tournaments, a Formula One Grand Prix auto race, a heavyweight boxing championship bout (Ali vs. Spinks, 1978), and the 1985 Super Bowl. A 1975 graduate of Pepperdine University in Malibu, Calif., Chris has won more than a dozen regional and national awards for his work. He and his wife, Rebecca, have four children and reside in Redwood City, Calif.Follow on Twitter: editingwhiz

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