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Sunnyvale, California-based Internet portal and search engine company Yahoo expects to announce later this  month a plan to lay off what may be hundreds of employees as part of a major reorganization effort to increase profitability and boost sagging stock prices, sources familiar with the matter said Monday. "There will be some reductions in the workforce [which] would likely be in the hundreds," said one unnamed source in a recent Reuters article in reference to the Web's top destination in the United States, which has seen seven straight quarters of falling profits as it faces the onslaught from search engine leader Google and such popular social networking Web sites as MySpace and Facebook. Announcement Could Come This Month Both the New York Times and Wall Street Journal reported Tuesday that layoffs are expected at Yahoo, which employs some 14,000 people globally including thousands in its Sunnyvale headquarters, however the likely extent of the job losses has yet to be determined by company executives, who would not comment specifically about any layoff plan. An announcement is expected around the time of Yahoo's quarterly results conference call on January 29, and the sources cited by the Times would not rule out adjustments to any layoff plans based on fourth-quarter results. It is expected that Yahoo, in spite of as many as 700 possible layoffs, which would represent 5 percent of its workforce, will end 2008 with roughly the same number of employees as it had when 2007 ended, the sources said. Yahoo spokeswoman Diana Wong noted the firms continued plans for hiring during 2008. "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," said Wong in an e-mail statement made available to the Times. "Yahoo continues to attract and hire talent against the company’s key initiatives to create long-term stockholder value," added Wong. Yang's Restructuring Yahoo co-founder Jerry Yang, who last summer took over as chief executive from former film studio tycoon Terry Semel during a period of shareholder rumblings surrounding poor company performance, said in October after concluding a 100-day study that Yahoo would narrow the swath of its focus to three key goals: becoming the leading "starting point" for Web users, gaining popularity in the online advertising market, and embracing more open standards to attract third-party software developers and publishers. While Yahoo Web properties attract some 500 million visits each month, it has lost a significant share of the online advertising market, which has led to cutbacks in areas such as the firm's generally unsuccessful social networking Web site Yahoo 360 and several other properties in the auction, photo and premium music markets, along with the short-lived Web entertainment project known as "worlds". During an appearance at the recent Consumer Electronics Show in Las Vegas, Yang spoke about efficiency. "The future is about making the Web experience simpler and more efficient for everyone," said Yang. Yahoo Facing Major Round of Layoffs Yang, Yahoo president Sue Decker and other company executives have expressed optimism that the changes put in place have positioned Yahoo for a positive upswing, despite increasing concern from some analysts that Yahoo might be ripe for acquisition by Google or software giant Microsoft, although they have cautioned not to expect a quick financial turnaround as well. Layoffs may be seen as an additional and necessary move in order to avoid becoming a takeover target for a company such as Microsoft, which in early 2007 was reported to be considering an offer of as much as $50 billion as it too looks to check Google's strong growth. Yang has said that he will reject such takeover attempts or any plan that would split 14-year-old Yahoo into separate entities, such as IAC/Interactive's chief executive Barry Diller has recently done. While Yahoo attracts more visits each month than Google in the U.S., Google is the clear leader in the online search result advertising market. Yahoo History Yahoo last made significant workforce cutbacks in 2001, following the dot-com crash, and has since had a steadily growing number of employees, including over 200 added in 2007. Among  the companies Yahoo acquired last year were e-mail firm Zimbra and online advertising companies BlueLithium and Right Media, whose employees accounted for many of the 200 positions Yahoo added in 2007, along with other hirings. Yahoo's long range plans, which look to include layoffs, will eventually lead to growth according to spokeswoman Wong. "Yahoo has embarked on a multiyear transformation that includes making tough decisions about the business to help the company grow," said Wong in the e-mail statement. Company filings show that Yahoo saw a 29 percent increase in its workforce size in 2005, followed by a 16 percent increase in 2006 that left its employee count at some 11,600. Yahoo Financial State Since the early months of 2006 Yahoo's share prices have fallen by more than 50 percent, and during the most recent quarter the company said that it's profit fell some 5 percent to $151 million, compared to figures from  one year earlier, a period during which rival Google saw a 46 percent increase, to over $1 billion, in its profits. Google's share of the search engine market is more than three times as big as Yahoo's. Some analysts are skeptical about Yahoo's plans. "People right now are very skeptical about Yahoo, and for good reason," said Standard & Poor's equity analyst Scott Kessler in a recent Washington Post article. "It has not consistently delivered what most would characterize as good financial performance," added Kessler. Another analyst, Sanford C. Bernstein's Jeffrey Lindsay sees an urgency in the timing of Yahoo's plans. "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 said in a research note made available to the San Jose Mercury News. "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," added Lindsay. Investor Demands In 2007 a highly critical memo from one of then-CEO Semel's senior staff  accused Yahoo of getting involved in too many areas of the Web and thus hurting the firm. As of Friday's market close Yahoo's value was $27.8 billion. Some see layoffs as a natural adjustment to past missteps at Yahoo. "The headcount went up without a clear sense of what the company was," said Gartner Inc. analyst Mike McGuire in a recent Bloomberg article. "A lot of Wall Street was taking Yang at his word when he said they were going to look at everything," McGuire added. Google's workforce is only some 15 percent greater than Yahoo's, however it has a market value nearly seven times as large. Related Links:
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12:07 am on Jan. 23, 2008 (utc 0)