Sunnyvale, Calif., -- Struggling Internet pioneer Yahoo Inc., attempting to chart a new course in a troubled economy, started issuing pink slips Wednesday to the iniquitous list of 1,500 employees worldwide, majority of whom will be affected by its previously announced 10 percent job cut and slash costs by about $400 million a year, the company confirmed.
While reports are buzzing about a prospective successors to chief executive Jerry Yang and a major investor expressed hope of reviving talks with Microsoft, but the internet giant under extreme pressure has swung the job axe across all departments at Yahoo!, with human resources and finance workers reportedly expected to take the biggest hit.
Yahoo CEO Jerry Yang informed Yahoo! employees that the firm “must take actions to better perform in today’s unstable global economy. The cutbacks we are making are very hard, but they are also very necessary as we focus on the long-term health of our business.”
While we have noticed efficiencies in many areas of our business, making reductions is unfortunately unavoidable. And majority of the 1,520 layoffs affect employees at Yahoo’s U.S.-based locations and come from a number of areas within the company, the company said.
“There was a comprehensive review for possible cuts and no one area received a pass,” said Brad Williams, a Yahoo spokesman, who noted Yahoo engaged in a strategic review of where it would make most sense to cut the positions.
Williams, however, declined to elaborate which areas of Yahoo’s business took the greatest hits with the layoffs. He, however, added that the decision to axe jobs had been a “difficult” one, but said it meant Yahoo! could “better align costs with revenues”.
Yahoo also mentioned that it would close down a number of projects and put others into “maintenance mode,” but spokesman Williams said the company had not made any final decisions yet on that front.
“To slash costs, it will close few offices in northern Europe and combine offices in North America.”
Headquartered in Sunnyvale, California, Yahoo is notably acknowledged for its web portal, search engine and mail services. The company was founded by Jerry Yang and David Filo in January 1994. According to estimates, the domain yahoo.com attracted at least 1.575 billion visitors annually by 2008.
Yahoo also revealed in a regulatory filing that it had also revised a controversial employee severance agreement it adopted last February less than two weeks after Microsoft made its unsolicited offer to buy the Internet giant.
The revisions, which settled a lawsuit filed by investors, restricted severance payments that were assured to all Yahoo employees if they were fired or quit after being reassigned to a new job within two years after a Microsoft takeover. In some quarters, the changes were seen as an invitation to Microsoft to renew overtures.
Some employees were seen departing Yahoo’s Sunnyvale campus with their belongings packed in duffel bags, others with backpacks stuffed tight with their items.
A four-year employee stated that the atmosphere this morning was extremely quiet, whereas on other days it is common to find people moving about in the morning and chatting in groups. She pointed out that her team were unscathed till noon but that layoffs would be occurring through the rest of the day.
Another employee who was recently hired mentioned that the company’s headquarters campus was the scene of “lots of carnage” on Wednesday.
The layoffs and project cancellations come as Yahoo seeks a new chief executive to replace co-founder Jerry Yang, who said last month he would relinquish the position when a successor is found, and another shareholder asked the board to sell Yahoo’s search business to Microsoft.
In a letter to Yahoo’s board, hedge fund Ivory Investment Management (IIM), which owns a 1.5% stake in the company, said selling its search business to Microsoft could result in a deal worth twice as much as Yahoo's current stock price.
Some analysts have suggested that a 10% reduction in Yahoo’s workforce was insufficient given the worsening slump in Internet display advertising, Yahoo’s leading business.
Williams said Yahoo was trying to balance cost savings across all of its businesses, adding the company made some adjustments for "strategic priorities." Announcements about specific projects will be made over the next several months, he said.
Yahoo is also making considerable progress in its search for Jerry Yang’s replacement. Many new names have come up as Yang’s potential successor. Although it will be too soon to guess the possible candidates for the job, few names have assumed centre stage. These include Peter Chernin, the chief operating officer of News Corp, Arun Sarin, the former Vodafone CEO, Sue Decker Yahoo’s president and Jonathan Miller, the former AOL CEO.
Many shareholders also anticipate the new CEO would be able to find out a way to sell Yahoo’s search business to software giant Microsoft Corp., which earlier this year offered $47.5 million to buy all of Yahoo. Yang came under fire for rejecting that offer and Microsoft has since said it will not revisit a deal for the entire company.
The company said it has likely hoped to inform most of the employees being laid off on Wednesday, but noted that regulations in some European countries would delay the process in parts of the region.