Yahoo Cans 2,000, Aims to be Leaner and More Innovative

3 minute read
Chris Knight avatar

As widely rumored, Yahoo has just announced 2,000 redundancies spread across many of its units, as the company aims to slim down, focus on core profitable areas and return to looking after users and advertisers.

One More Round?

Yahoo has announced something like its sixth round of layoffs in the last few years with the workforce going down to a mere 12,000 workers plus contractors around the world. In a statement, CEO Scott Thompson explained the redundancies as a move toward a bold new company:

"Today's actions are an important next step toward a bold, new Yahoo – smaller, nimbler, more profitable and better equipped to innovate as fast as our customers and our industry require. Our goal is to get back to our core purpose – putting our users and advertisers first – and we are moving aggressively to achieve that goal."

The reduced workforce will save the company some US$ 375 million over the year with a charge of around $125 million this quarter to cover the cost of the redundancies. Jobs will be shed around the company's global offices. The company still generates some $4 billion in revenue, but its brand has become so anonymous compared to the likes of Google and Facebook that it really needs to generate high-visibility products to compete, or seriously raise its profile.

UPDATE: Yahoo will make a statement after its Q1 figures are released on Tuesday, outlining its future strategy in more detail. According to Businessweek, Scott Thompson will have to outline a dynamic and dramatic plan for a turnaround after the previous announcement of layoffs and internal strife.

Good for Search

If Yahoo does just focus on search and advertising then it needs major partnerships to give the Yahoo search engine prime placement on browsers, mobiles, tablets and other products where the majority of search action is taking place.

Learning Opportunities

Of course, the company could earn some money from its protracted legal scrap with Facebook. Since we last reported on this, Facebook has launched a countersuit which may see the two parties prefer to cross-license and settle out of court.

The company will announce more detail about its future plans in its next quarterly financial report, due to take place on 17 April. The chances of anything dramatically new being announced seem remote, and its retreat to the core could see the company vanish into the search wilderness.

After so many boardroom changes and in-fighting, I think Yahoo could do with a few months of deep searching to sort itself out and find a new mission, while protecting its core assets. Anything other than that will see the chaos and confusion continue until it burns up. Any thoughts on where Yahoo could have a positive impact?