Reports: Yahoo plans to cut staff

Yahoo will announce hundreds of layoffs next week, according to published reports.

Yahoo will announce plans to lay off hundreds of its 14,000 employees as the faltering Internet giant continues trying to snap out of its financial funk and fine tune its business strategies, several media outlets are reporting.

Yahoo will let go hundreds of staffers as part of its ongoing efforts to improve its profitability and compete against Google, Facebook, MySpace and others, according to articles in The New York Times and The Wall Street Journal that cited anonymous sources.

However, the Journal said that Yahoo will hire new employees in other areas and that it plans to finish the year with about the same amount of employees it had at the end of 2007.

If Yahoo does in fact keep its headcount at last year's level, then the layoffs will probably be seen as a rebalancing of staff and less as a sign of financial distress at the company.

A Yahoo spokeswoman contacted by IDG News Service declined to comment about layoff plans but said in an e-mailed statement that, as part of its multiyear transformation plan, the company plans to "invest in some areas, reduce emphasis in others, and eliminate some areas of the business," based on its priorities.

"Yahoo continues to attract and hire talent against the company's key initiatives to create long-term stockholder value," she said on Tuesday.

Yahoo is still deciding the extent of the layoffs and the areas that will be affected, and it will likely announce concrete plans to reduce staff next Tuesday when it issues its fourth-quarter earnings report, the Times and the Journal reported.

Whatever ends up happening with the reported staff cuts, it's undeniable that Yahoo is still very much in reorganization and recovery mode.

Once viewed as a dominant provider of online advertising and consumer Internet services, Yahoo has in recent years looked out of sync with the latest technical innovations and business opportunities. For starters, it let Google run away with the market for Internet search and advertising, and failed to develop a leading social-networking site, letting MySpace and Facebook capitalize on that opportunity. Yahoo also largely missed the online video revolution, which Google latched on to with its YouTube acquisition.

Along the way, its sales and profits have been disappointing for the past two years, leading to several management shakeups in late 2006 and 2007.

By far, the most dramatic happened in June, when co-founder Jerry Yang took over as CEO and chairman from Terry Semel. At the time, Susan Decker, former chief financial officer and head of Yahoo's advertiser and publisher group, became president.

A week after Semel's demotion to non-executive chairman, Yahoo combined its search and display advertising sales teams in the U.S. It was an attempt to extend the company's long-standing, core display advertising client relationships to the pay-per-click business, which generates about 40 percent of the industry's online advertising and is dominated by Google.

In August, Yahoo again shook up its top management ranks when it announced that its top sales executive would leave and that a new global sales organization had been created.

In December 2006, Semel had rolled out a major reorganization, creating three main business units to focus on Yahoo's key customer segments: consumers, advertisers and publishers. At the time, Semel also announced that Dan Rosensweig, then chief operating officer, would leave the company.

That reorganization was preceded by a widely publicized internal memo that was leaked to the media in November and came to be known as the Peanut Butter Manifesto. In the scathing memo, Brad Garlinghouse, Yahoo's senior vice president of communications and communities, called for a major reorganization, saying the company lacked "a focused, cohesive vision" that had made it "reactive" and eager to be "everything to everyone."

Since the uproar over the Peanut Butter Manifesto and the ensuing shakeups, Yahoo has seen quite a few changes in its upper management ranks. In addition to Semel's demotion and Rosensweig's departure, also gone are Wenda Harris Millard, who was chief sales officer, and Chief Technology Officer Farzad Nazem. In June, The New York Times reported that, in addition to these executives, at least 17 others at vice president level or higher had left Yahoo since the December 2006 reorganization.

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