Print 52 comment(s) - last by Emryse.. on Oct 23 at 7:18 PM

More painful cuts come, as expected; Yahoo blames bad economy for its misfortune

DailyTech reported earlier this month that Yahoo was contemplating job cuts.  Faced with sagging growth and market share loss to Google, coupled with the possible loss of the Google ad partnership due to regulatory headaches, Yahoo had few other options than to make cuts.

Yahoo co-founder and CEO Jerry Yang, under pressure by some investors of late to resign, gave a statement describing the cuts, stating, "We have been disciplined about balancing investments with cost management all year, and have now set in motion initiatives to reduce costs and enhance productivity.  The steps we are taking this quarter should deliver both near-term benefits to operating cash flow, and substantially enhance the nimbleness and flexibility with which we compete over the long term."

At least 10 percent of Yahoo's workforce will be slashed, meaning that at least 1,520 will lose their jobs.  The company hopes that the cuts will help it to reduce costs, while not significantly reducing its profitability. 

The cuts were the second for Yahoo this year, with the company letting 1,000 employees go this last January.  In total, Yahoo has let go close to 16 percent of its workforce since the start of the year.

Yahoo will also be relocating offices and consolidating real estate to try to reduce costs.  Mr. Yang stated in a conference call, "We are identifying ways we can operate more efficiently."

Yahoo's revenue for the quarter was $1.79B USD, up 1 percent from the quarter a year before.  Without the commissions it paid ad partners, the company pulled in $1.33B USD, slightly lower than the average analyst prediction of $1.37B USD.  Net income for Yahoo was $54M USD, down 51 percent from last year.  Profits excluding one-time charges were $123M USD, roughly in line with analyst expectations.

While the report contained some disappointing spots, it mostly was in line with analyst predictions, so some analysts hailed it as good news for the troubled search firm.  Sandeep Aggarwal, Senior Internet Analyst at Collins Stewart described the report as having "no more negative surprise beyond what we had already expected."  And Jeffrey Lindsay, senior analyst with Sanford C. Bernstein & Co said that the report "could have been a lot worse."

Mr. Lindsay praised the job cuts, stating, "If they really do take the staff numbers down for real, that will have a very beneficial effect."

Yahoo's management is blaming a weak economy for their company's struggles.  Yahoo Finance Chief Blake Jorgensen described in a statement, "An increasingly challenging economic climate and softening advertising demand contributed to revenues this quarter coming in at the low end of our outlook range.  While we are disappointed with our results, we're pleased that we continue to benefit from the aggressive cost management efforts we have pursued during the year."

Yahoo stock recently perked up after falling to the $11/share range, after Microsoft CEO Steve Ballmer commented that Microsoft might still be interested in Yahoo or parts of Yahoo.  Microsoft had offered Yahoo $32/share, almost three times the current stock price, but Yahoo had rejected the offer, stating it was worth significantly more.

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RE: Only in America
By sgw2n5 on 10/22/2008 8:51:38 PM , Rating: 2
Wow, you are stunningly ignorant of how businesses operate.

If you don't think that the good old boy network and cronyism are alive and well within our business structures, and that is exactly how most higher level jobs are filled... you are either a non-observant boob, or have never held a job.

RE: Only in America
By Emryse on 10/23/2008 6:50:50 PM , Rating: 2
No - actually, I'm very much aware and involved.

You can only "fake" doing a job for so long, before you are either marginalized as a leader, or replaced.

At the end of the day, your customer's still need to buy what you're selling. Now, if your business allows you to hire who you want, for whatever your reasons are, then you're still making acceptable positions.

Your industrial age perspective of the workforce was departed circa 1999. We are past the Information Age and into the Knowledge Management Era. People are increasingly being measured by metrics that show what value they are actually contributing to the process, and those metrics are increasingly concerned with what actual, applicable, relevant *knowledge* is being utiltized to contribute that value, and who possesses, manages, shares, discovers, and evolves that knowledge.

The tolerance for people holding cushy jobs, especially at the high level of executive leadership, is very very low - and with each such debacle such as the current Yahoo fiasco, that tolerance only decreases.

While it is true that high level jobs are filled by people who know each other, it is not because of some secret handshake or favor owed, but rather because they have by this time in their careers sustained a reputation to *get stuff done*, *influence people*, and *champion innovation* to maximize the value of any given organization which they have previously worked for.

Am I stating this is the way it works every single time? No. But is this generally the way it works? Of course.

Oh, and you remain to be the only boob in this conversation; and I think anyone with a brain can tell between the two of us who has or could "hold a job".

Get off the computer, and get back to your pizza deliveries.

"What would I do? I'd shut it down and give the money back to the shareholders." -- Michael Dell, after being asked what to do with Apple Computer in 1997

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