Yahoo! Axes Workers in Latest Turn-Around Bid

April 4, 2012
2,000 employees to be cut as the company loses more ground to Google and Facebook.

Struggling U.S. Internet pioneer Yahoo! said April 4 it would slash some 2,000 jobs in a purge aimed at transforming into a "smaller, nimbler, more profitable" company.

Yahoo! chief executive Scott Thompson, who took the helm in Jan. promising to turn the company around after a year of falling income, said the job cuts were a "tough decision" to achieve that goal.

"We are intensifying our efforts on our core businesses and redeploying resources to our most urgent priorities," Thompson said in a statement.

"Our goal is to get back to our core purpose -- putting our users and advertisers first -- and we are moving aggressively to achieve that goal."

The restructuring will center on "select" groups and the platforms that support them, the Sunnyvale, California-based company said.

A key focus will be data that drives "deep" personalization for users and return on investment for advertisers.

"Today's actions are an important next step toward a bold, new Yahoo! -- smaller, nimbler, more profitable and better equipped to innovate as fast as our customers and our industry require," Thompson said.

Yahoo! has been trying to re-invent itself as a "premier digital media" company since the once flowering Internet search service found itself withering in Google's shadow.

While striving for a new identity, the company has seen an exodus of talent that commenced during a failed bid by technology giant Microsoft (IW 500/16) to buy Yahoo! four years ago for about $45 billion.

"They have been bleeding talent for a while," said independent Silicon Valley analyst Rob Enderle.

"At some point, all of the smart people leave because otherwise you are just waiting around to be shot," he continued. "There are places like Google and Facebook they can go work for."

While Thompson didn't share details as to "core values" that Yahoo! would focus on, they appeared to involve publishing online content tailored to tastes of website visitors.

"The rhetoric around the layoffs indicates he is taking Yahoo! down to a publishing core as a supersite," Enderle said.

"The super-portal things are very dot-com, and that didn't work out very well," he added with a reference to the legendary boom and bust that took place in the Internet industry more than a decade ago.

And Yahoo! recently announced it would launch a tool allowing users to signal that they don't want their online activities tracked, a key component of effectively targeting lucrative ads.

The Internet firm's share of U.S. online ad revenues sank to 9.5% last year from 15.7% in 2009 and will drop further this year, according to eMarketer.

Social networking giant Facebook is becoming the preferred venue for display advertising key to Yahoo! revenue while Google's dominance in search advertising strengthens, eMarketer indicated.

Yahoo! relies on Microsoft's Bing search engine to handle queries at its websites, customizing results for users.

The company said it would notify approximately 2,000 people that their jobs have been eliminated or would be in the future. It gave no details on the timing of the layoffs.

The 17-year-old company had more than 14,000 employees at the end of 2011. It also has a large number of software contract workers.

A Yahoo! spokeswoman told AFP that the 14% workforce reduction was "not across the board" but that "most units have been impacted." She would not disclose further details.

The shakeup could target Yahoo's public relations and marketing division, research and other marginal businesses.

Yahoo! said it expects $375 million in annualized savings from the job cuts.

"With a clear focus on profitability and growth, the company will be disciplined in its investments and radically simplify how it builds, launches and maintains many of its properties and products," it said.

Yahoo! stock prices slipped slightly to $15.06 in mid-day trading in an overall declining market.

Thompson, formerly head of mobile payments firm PayPal, became chief executive after months of turmoil at Yahoo!, including deadlocked talks over possibly selling off the company's valuable assets in China and Japan.

Two weeks after Thompson was recruited, Yahoo! co-founder and former chief executive Jerry Yang resigned from the board of directors.

A few weeks later, the chairman and three other directors said they would step down, opening the way for Thompson's agenda.

Copyright Agence France-Presse, 2012

See Also:

Sponsored Recommendations

Voice your opinion!

To join the conversation, and become an exclusive member of IndustryWeek, create an account today!