Layoff Rumors Could Be A Sign Of Things To Come At Yahoo

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(Image: S. R. Bichara)
(Image: S. R. Bichara)

BUSINESS

  • Blog reports Yahoo CEO plans thousands of layoffs
  • Layoffs part of major restructuring aimed at increasing revenue
  • Yahoo losing advertising revenue to competitors

America’s most popular Internet portal Yahoo! Inc. is on the verge of thousands of layoffs, reports The Wall Street Journal blog All Things Digital. Rumors say the layoffs are part of new chief executive officer Scott Thompson’s plan to restructure the company by finding new revenue streams and business models.

Layoffs would likely come in the product department and could begin in a few weeks. Additional layoffs also could come in the research and public relations departments.

Yahoo issued a written statement saying: "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. Beyond that, we will not comment."

Some effects of Thompson’s restructuring already can be seen.

Yahoo recently made changes to its board of directors when in February, the internet giant announced three members of the board along with the chairman would be leaving. Once they are replaced, no Yahoo board member will have been on the board for more than two years.

The company also is threatening to sue Facebook over patent infringement, claiming the social networking site is using innovations Yahoo patented and must enter into a licensing agreement. The patents in question cover social networking, instant messaging, advertising and other web-based services.

Revenue Boost Needed

Analysts say layoffs could be a sign of things to come at Yahoo. The two biggest expenses a new media company has are employees and information technology. The departments where layoffs occur, as well at the departments they do not, are indicative of where Yahoo needs to boost revenue, analysts say.

At the end of 2011, Yahoo had 14,100 employees, more than the same time the previous year.

Yahoo is increasingly finding, however, that it is losing advertisers to its rivals Facebook and Google Inc. fourth quarter revenue dropped to $1.17 billion, and net earnings were 5% less than 2010.

Former CEO Carol Bartz tried to increase the company’s efficiency but failed and was fired in September. Thompson replaced her as CEO in January, and was previously the chief executive of eBay’s PayPal unit.

Key Statistics - Search Engine Market Share January 2012 (source: comScore)

  • Google grew to 66.2% (up from 65.9% in December 2011).
  • Bing grew to 15.2% (up from 15.1%).
  • Yahoo fell to 14.1% (down from 14.5%).
  • Ask grew to 3% (up from 2.9%).
  • AOL remained unchanged at 1.6%.

By Melina Druga for
Melina Druga is an American writer and editor. She is the author of Enterprising Women: Practical Advice for First Time Entrepreneurs.

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