Market Overview

Yahoo Reportedly Planning Thousands of Layoffs


According to's Kara Swisher, Yahoo! (NASDAQ: YHOO) Chief Executive Officer Scott Thompson is planning a company wide restructuring that could see thousands of Yahoo employees being laid off. Swisher cited numerous unnamed sources with knowledge of the planned layoffs who said that the restructuring announcement could come as soon as the end of this month.

Yahoo has yet to confirm the report but the company has been under increasing pressure over the last few years from investors who feel that the company isn't doing enough to boost its languishing share price. The rumored plan to fire thousands of employees could be as much about appeasing impatient investors like Daniel Loeb as it is about improving Yahoo's business performance.

Swisher's article said that Yahoo's products organization, public relations, marketing, research, marginal businesses and weaker regional efforts were among the business units likely to see significant staffing reductions. One source cited in the report added that each Yahoo business unit will be asked to show either significant cost savings or a credible plan to achieve rapid revenue growth.

Although Yahoo CEO Scott Thompson is new to the job, the layoffs might not come as much of a shock when considering other moves that Thompson has made since taking over at Yahoo. Probably his most controversial move has been to threaten to sue Facebook over what Yahoo claims are patent violations. Thompson is also said to be reconsidering possible sales of his company's valuable Alibaba and Yahoo Japan holdings.

Yahoo was once the leading internet company but has been forced to watch as relative upstarts like Google (NASDAQ: GOOG) and Facebook race past it. Things have gone downhill for Yahoo ever since it unwisely rejected a $45 billion buyout offer from Microsoft (NASDAQ: MSFT) four years ago. Its current market valuation is now just barely over a third of the generous Microsoft offer.

The layoffs would be just the latest shake up at Yahoo, which has seen several board members and executives leave over the last few years, as none of them were able to find a way to unlock the value in Yahoo's holdings.

Wall Street doesn't seem impressed by the rumor that Yahoo will soon layoff thousands of its employees. The stock surged higher shortly after the market opened on Monday morning, then steadily declined into the afternoon trading session. Shares of Yahoo were down 1.1 percent at $14.56 at the time this article was written.

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