RealTime IT News

Ax Falls at Yahoo as Yang Notes 'Tough Times'

Yahoo layoffs

Layoff notices were given at Yahoo today as the struggling Internet giant looks to control costs during a management transition and the downturn in the economy.

Yahoo (NASDAQ: YHOO) had announced plans to lay off as many as 1,500 employees back in October during its earnings call. The pink slips started coming today.

A Yahoo spokesperson confirmed that 1,500 remains the approximate total number of those being let go -- about ten percent of the company's workforce. She also said the cuts are global and across all departments.

The news comes as the latest effort by the pioneering Web portal to streamline operations in a difficult advertising market. At the same time, it's working to find its footing after rivals Microsoft and Google earlier this year each backed out on doing deals with the company that could have dramatically altered its direction.

CEO Jerry Yang, in a blog post today headed "Tough times," said the company has been able to trim costs in many parts of its business.

But, he wrote, "laying off employees is unfortunately unavoidable. our [sic] difficult decision to let colleagues go reflects the changes we're having to make to better align costs with revenues -- something businesses in virtually every sector are also having to do."

Last month, Yang announced he would be giving up his CEO post and helping in the search for his replacement. Until then, he continues to perform as CEO.

During the executive transition -- and its efforts to cut costs -- Yahoo continues to promote new initiatives. Next week, for example, Yahoo executives will discuss progress in its Y!OS (Yahoo Open Strategy) at a media event.

An invitation sent to InternetNews.com said Y!OS has made "positive progress" and is part of the transformation designed to "rewire Yahoo" unveiled earlier this year by CTO Ari Balogh.

The layoff news also comes amid reports that a Yahoo shareholder group wants the company to reconsider a bid from Microsoft to buy its search business. Yang has strongly resisted such a move since the Redmond, Wash. software giant tried and ultimately failed in an offer to buy all of Yahoo.

"You couldn't ask for a worse Christmas present if you're a Yahoo employee," said Aberdeen analyst Michael Dortch. "The Microsoft deal they passed up is looking better every day."

Dortch thinks Yahoo's choice for CEO will go a long way toward determining its future prospects. But, he added, the clock is ticking. "They have a lot of market traction, but it's unclear they have forward momentum," Dortch told InternetNews.com." Yahoo's leadership needs to demonstrate the same kind of balanced thinking the Obama transition team is demonstrating, and it has about the same amount of time -- a hundred days."

[cob:Special_Report]In its third-quarter earnings call in October, Yahoo said it had begun implementing a series of cost-reduction initiatives with a goal of shaving more than $400 million from its current annualized cost run rate of approximately $3.9 billion, in a move that aimed to take effect before the end of 2008.

It noted at the time that the majority of expenses it had in mind were "headcount-related," and that it expected to reduce its global workforce this quarter by at least 10 percent.

A taco enticement

One company offering a potential lifeline to some of Yahoo's laid-off workers is Web video calling service TokBox. The company parked just outside Yahoo's headquarters today handing out free tacos to anyone interested and a menu of job openings at the firm. "We're looking for Web developers and trying to share some positives about job opportunities at a cool company," a spokesman told InternetNews.com.

She said the company met with several Yahoo employees who had just been let go today. But there won't be that many ex-Yahoo'ers making the jump: The spokesperson admitted that TokBox has less than ten openings.