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SAN FRANCISCO - Yahoo is planning to announce cutbacks later this month that will likely lead to hundreds of job losses at the nearly 14,000 employee company, a source familiar with the plan said.
Yahoo spokeswoman Diana Wong declined to comment on a report published on the Silicon Alley Insider blog, which said Yahoo has created a list of "1,500-2,500 jobs that may be eliminated in the next two weeks."
The source said the report significantly exaggerated the scale of the potential layoffs, the exact number of which is still being settled, but which will be announced around the time the company reports year-end results on January 29.
"There will be some reductions in the workforce," the source says. "It would likely be in the hundreds."
Yahoo's workforce stood at close to 14,000 at end-2007, up around 2,600, or 23 per cent, from the 11,600 employed a year earlier, according to company filings. The company's headcount had grown 16 per cent in 2006 and 29 per cent in 2005.
The source said Yahoo expects to end 2008 with the same number it had going into this year - close to 14,000 - which would suggest some selective hiring in focus areas offset by cutbacks in other businesses.
Writing on Silicon Valley Insider, former Wall Street analyst Henry Blodget said Yahoo Chief Executive Jerry Yang was still deciding whether to go ahead with the layoffs - and could pull out of the plan if the stock price rebounded.
"We believe Yahoo should reduce headcount by at least a thousand people," Blodget said, noting that for months, Sanford C. Bernstein analyst Jeffrey Lindsay has called on Yahoo to make steep job cuts of 15-20 per cent to reinvigorate the stock.
The internet media company has been seeking to refocus its business around three key themes in order to stoke its flagging growth in the face of competition from search rival Google and fast-growing social networks such as Facebook.
Yahoo has been struggling to recover from two years of competitive setbacks that has led revenue growth slow to around 12 per cent or about one-third of its previous growth rate.
Analysts expect revenue from the recent fourth quarter to grow around 15 per cent, according to data from Reuters Estimates.
As part a turnaround plan, the company elevated co-founder Yang to become CEO last June. Together with President Sue Decker, Yahoo has shed low-performing businesses while making several small-to medium-sized acquisitions.
But to date, it has resisted calls by Wall Street analysts and some investors to take several more drastic steps including large-scale layoffs, outsourcing of its web search business to Google or a potential merger with Microsoft.
Layoffs will focus on areas of the business that do not fit within the three main strategies the company has focused on under Yang. These are to make Yahoo.com the "starting point" for more web users, to make its online ads a "must buy" for advertisers and to open up its sites to outside developers.
The focus of the cuts will be on "anything that doesn't target the three Big Bets," the source said.
- REUTERS
