December 16, 2010 by staff
The job cuts announced Tuesday following weeks of speculation about whether a long-term financial funk spur Yahoo to cut its payroll before the New Year. Reports of layoffs from Yahoo plans surface a month ago on two popular technology blogs, TechCrunch and all things digital.
This is the fourth time in three years that Yahoo has resorted to massive layoffs to increase its revenues.
The company is under pressure to reduce costs as its revenues grew by less than 2 percent so far this year and CEO Carol Bartz has promised to increase the operating profit margin of Yahoo, provided that 24 per cent by 2013. The margin is about 12 percent during the first nine months of this year.
“Today, the personnel changes are part of our strategy to better position Yahoo for revenue growth and margin expansion and support our strategy to provide differentiated products on the market,” the company said in a statement.
Although Yahoo is clearly needed to tighten their belts to widen its profit margin, the timing of layoffs has been horrible, “said Gleacher & Co.anlyst Yun Kim.”I do not think it’s going to score the PR,” he said.
Layoffs recurrent Yahoo have failed to lift its share price, which has been since the collapse of the company balked at a takeover bid by Microsoft Corp. in 2008. Microsoft’s final offer was valued at 47.5 billion, or $ 33 per share. The shares fell 7 cents to close Tuesday at 16.63, and slightly below their price and 17.30 at the end of September 2008, when Yahoo’s payroll peaked at 15,200 employees. Yahoo employed 14,100 people before the last layoff.
This round of cuts is concentrated in consumer products group of Yahoo U.S., which has been revised since Bartz was in the former Microsoft Corp. executive Blake Irving to run the division. Since his arrival seven months ago, Irving has committed to bring “cool to Yahoo” while avoiding changes that have linked Yahoo e-mail and other parts of its website to two of the best Internet services, Facebook and Twitter.
Yahoo struggles have raised questions about whether Bartz, CEO of Yahoo for the last two years, could lose his job before his contract expires in January 2013. Doubts on Bartz were compounded by a wave of defections among the leaders Yahoo and his lack of experience in online advertising – the main source of revenue for Yahoo.
Bartz, 62, has repeatedly said it’s too early to judge its recovery efforts, as it has inherited such a mess of his predecessor, co-founder Jerry Yang of Yahoo. Board of 10 members of Yahoo, which includes Yang and Bartz, gave no indication to date that he was disappointed with the performance of Bartz.
Yahoo’s problems mainly due to its inability to keep up with Facebook, Twitter and other younger rivals, often more innovative.
Although the site Yahoo attracts more than 600 million visitors worldwide, many of these people remain long as they increasingly dragged on Facebook and broadcast their thoughts, activities and recommendations on Twitter.
This competition exacerbated the challenges already facing Yahoo after beating Google Inc. on the Internet market research for profit. Although the pendulum changed several years ago, Yahoo was already much larger than Google and even toyed with the idea to buy smaller rival can, just as he once did with Facebook.
Unable to withdraw these offers, Yahoo is now lagging behind the growth of Google and Facebook that advertisers spend more of their marketing budgets online.
Google’s revenue during the first nine months of the year rose 23 percent to nearly 21 billion, and revenue more than quadrupled from Yahoo $ 4.8 billion during the same period. Privately held Facebook does not disclose its results, but it’s so fast she had to move into larger headquarters earlier this year. Facebook has been luring advertisers away from Yahoo, on the basis of market shares of U.S. figures compiled by eMarketer. Bartz recently described as the biggest rival Yahoo Facebook.
Bartz Google abandoned hunting last year when it decided to outsource the responsibility to run the search engine from Yahoo to Microsoft Corp. The 10-year partnership is designed to increase revenue for Yahoo by lowering its costs and enabling the company to focus on serving up more content that will attract visitors and help sell more advertising.
After some layoffs of the past, Yahoo progressively expanded its payroll despite its poor financial performance. There is a chance that happening again because Yahoo announced Tuesday that he is still in hiring mode, especially for the jobs of its mobile services and location.
The dismissals of the holiday season bring more prominence to the contrasting fortunes of Yahoo and its rivals.
Google, for example, has added nearly 3,500 employees to its workforce this year and everyone has promised to raise at least 10 per cent next year. The company, based just a few miles from Yahoo in Sunnyvale, California, headquarters, also gave all 23,300 of its employees a holiday bonus of $ 1,000 after tax.
Workers laid off from Yahoo will get severance packages. The company declined to provide details.
Copyright © 2010 the Associated Press. All rights reserved.
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