Yahoo! has announced that it will cut 2000 of its work force in order to save $375m a year. This is a huge blow to employees given the company employs around 14,000 people and many thousands more contractors.
Scott Thompson, CEO of Yahoo! has said, “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.
We are intensifying our efforts on our core businesses and redeploying resources to our most urgent priorities. 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.
Unfortunately, reaching that goal requires the tough decision to eliminate positions. We deeply value our people and all they’ve contributed to Yahoo!.”
The company is informing employees today, and approximately 2000 people will be notified of job elimination or phased transition.
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Through its restructuring efforts, Yahoo! says that it intends to grow by responding more quickly to customer needs and competing more effectively in areas where it can win.
Yahoo! says that it has identified areas where it wishes to redeploy resources globally with a focus on increasing shareholder value. It has named these parts of the business as “a select group of core businesses, the platforms that support those core businesses, and the data that drives deep personalization for users and ROI for advertisers.”
It’s a brutal cut with a “clear focus on profitability and growth”, and Yahoo! says that it will be also be disciplined in its investments and radically simplify how it builds, launches and maintains many of its properties and products.
Yahoo! says that it currently expects to recognize the majority of an estimated $125 to $145 million pretax cash charge relating to employee severance in its second quarter financial results. It may incur additional charges in connection with this action. More information will be provided about Yahoo!’s future direction in conjunction with the release of its first quarter financial results on April 17, 2012.
Yahoo has been making headlines recently as it got into a legal battle with Facebook over patents. The company has suffered at the success of Google and Facebook taking over its market.
Bloomberg reported just recently that Third Point LLC, Yahoo!’s largest outside shareholder, was preparing for a proxy fight and unveiled a website that calls for changes at the Yahoo! and a proposed selection of alternative board candidates.
Further signs of trouble at the top were highlighted when Yahoo announced that it had appointed PayPal President Scott Thompson as its new CEO, three months after it fired Carol Bartz.