Source Contracostatimes


Yahoo is planning to lay off hundreds of people as part of an effort to refocus its sprawling Internet services to compete withrivals like Google and Facebook, according to a source close to the company.

It's unclear whether the cuts will be deep enough to satisfy Wall Street, which has been urging the Internet company to shed as much as 25 percent of its workforce of about 14,000. More than half of those employees are based outside of the Sunnyvale headquarters.

But the source said Yahoo also is planning to hire people to work on new initiatives, so ultimately there may be no reduction in the total head count.

Yahoo's stock has fallen more than 50 percent since the end of 2005, fueling a shareholder rebellion and the ouster of former Chief Executive Terry Semel, who was replaced by co-founder Jerry Yang in June.

Yang has laid out a strategy that is aimed at pleasing four key groups: regular users, Internet publishers, advertisers and developers.

"The future is about making the Web experience simpler and more efficient for everyone," Yang said during an appearance at the Consumer Electronics Show this month.
But analysts say Yang must take more dramatic steps if the company is to fend off competitors.

Noting that Yahoo's share of Internet searches fell from 22 percent to 17 percent in the past 12 months, Jeffrey Lindsay, an analyst with Sanford C. Bernstein, said in a recent research note that Yahoo should outsource paid search, automate display advertising and get rid of one in four employees.


"We think the company still has a solid core business and still has options - but the longer that management delays, the harder and more painful these options will be," Lindsay wrote.

Yahoo has not had extensive layoffs since the dot-com bust in 2000-01 temporarily dried up its Internet advertising business.

Yang has so far rejected the notion of allowing another company, like Google, to sell search advertising on Yahoo's behalf.

A company spokeswoman said in an e-mail statement Monday that Yahoo is in the midst of a multi-year transformation that includes making "tough decisions" about its business.
"Yahoo plans to invest in some areas, reduce emphasis in others, and eliminate some areas of the business that don't support the company's priorities," the statement said.