Thousands of jobs could go as Yahoo! wields cost-cutting axe

by Staff, Brand Republic 20-Oct-08, 09:10

SAN FRANCISCO - Yahoo! is expected to launch a cost-cutting drive including more job cuts, which are likely to exceed the 1,000 jobs the internet firm previously announced, as it attempts to turn around its fortunes.

The Wall Street Journal reports that Yahoo! could make an announcement about its savings plan on Tuesday, when its quarterly earnings statement is due. There are no estimates as to how many jobs will be cut, but several sources are reporting that they are planned.

If so, it will be the second time this year that Yahoo! has cut its workforce. In January it said that it was axing around 1,000 positions after a fall in profits. The company has around 14,000 employees.

Last week the company's share price plummeted to a five-year low of $12.90, as analysts said they feared an online advertising venture with Google may now not materialise. Earlier in the year Microsoft had attempted to buy Yahoo!, offering $31 a share, valuing Yahoo! $44.6bn.

The deal was rejected on the grounds it undervalued the company and Microsoft is now reported to have lost interest in any kind of acquisition deal.

According to the paper, Yahoo! has brought in consultants Bain & Co to advise on potential structural changes, and that the board is still considering a merger with AOL, owned by Time Warner.

Yahoo! has been hit by the dominance of Google and the rise of newer websites such as Facebook and MySpace. The economic downturn is widely predicted to see online display revenue dry up -- an important source of income for Yahoo!.

Comments

Holly Martins - 20/10/2008

I think it's important to view these job losses in the context of Yahoo's performance and the position it now finds itself in - a very distant second to Google - instead of the wider turmoil in the financial markets and economy.

James Sandoval - 20/10/2008

Although painful for Yahoo! staff and morale, this move to cut jobs is about right \(for more than the obvious reasons). We're in the early days of a major market correction, so we should expect to see similar news coming out of other internet advertising-driven organisations over the coming months. Google, too? Not quite, but their business won't be completely immune. The next several months will require many businesses to restructure, but - at the same time - many new businesses will start up...and create products and services that will challenge the Google's of today's internet world.

Erlend Wilhelmsen - 21/10/2008

Good luck Bain & Co. You can't solve this by restructuring. Look, I've been a customer with Yahoo! for ten years. They've had my personal information, data on my behavior, and endless chances to make me a brand advocate. I've paid them more than $1,300 for various search products. Never once - and I mean once - have I truly felt that they understand my needs and care about who I am. That is the mark of incompetence only matched by a certain US president.