Remember when MySpace was the number one social site? Soon we might be asking if we remember it at all. The cut of 47% of employees (or 500 people) earlier this week, sends the signal that MySpace is in trouble.

MySpace (news, site) used to be so cool and it was one of the first social sites that drove millions of users. Now this success is history and unfortunately, quite soon the site itself might become history. The company is in dire straits and this isn't surprising because reports about its difficulties have become the norm in recent months.

How Did MySpace Get There?

It is always sad to witness the death of something as remarkable as MySpace used to be. The numerous mistakes and desperate moves they made in the past didn't go unpunished and now it looks like they have hit the absolute bottom -- 47% of their employees have lost their jobs earlier this week.

I guess it wasn't unexpected for the employees, because when the company you work for is drowning deeper and deeper, job cuts are just round the corner. The recent Facebook integration, the plans for which were announced almost an year ago, just showed how helpless MySpace is.

It was not only the recession (the usual suspect in last years) and the expansion of competitors (above all -- Facebook) that stole audience from MySpace, most of the reasons are internal to MySpace and basically they boil down to poor management and inadequate decisions.

The decision to layoff 500 people was announced as a anti-crisis measure. For everybody who is familiar with corporate lingo, this translates as “the ship is sinking and we are throwing out everything we can”. The layoffs are part of a revamp strategy and an attempt to streamline operations, while generating revenue, but many people are skeptical that this strategy will work.

So, There Is No Hope for MySpace?

Even MySpace and parent company News Corp., hardly believe in the success of their efforts. New strategic partnerships, many of them on a local level in countries like Germany, UK and Australia, could bring in some cash but this will be just peanuts in comparison to the cash streams the company needs to operate.

MySpace is a burden for its owners and News Corp. has already voiced their intentions to sell it. As you can probably guess, the queue of strategic investors who are willing to bury their dollars in a dying site isn't long. While it is not completely unlikely for MySpace to find an investor, they will have to be a magician in order to put the company back on its feet.

The problem with MySpace is not only that it is poorly managed and cash stripped. The problem is more serious -- it is out of fashion and this is harder to reverse than to find billions of dollars to pour in. It seems that MySpace has just reach the end of its lifecycle and only a miracle can save it.

This isn't the first major social site to go down and the most interesting question is if Facebook is the next social site to hit the bottom? Now Facebook is all the rage but so was mySpace just a couple of years ago and Friendster even before that. We have already witnessed the demise of Friendster, now we are looking at the agony of MySpace, so what's next?