Yahoo cuts 2,000 jobs as radical reshaping begins
NEW YORK (CNNMoney) — Yahoo said Wednesday that it will eliminate 2,000 employees, around 14% of its workforce, as new CEO Scott Thompson begins radically streamlining the company.
The long-rumored job cuts could be the first of several rounds, as Thompson pares Yahoo (YHOO, Fortune 500) down to focus on what he views as the company’s core business lines.
Thompson, who joined Yahoo in January, plans to provide more information about his strategy during the company’s first-quarter earnings announcement, which is scheduled for April 17.
In a written statement, Thompson said the cuts “are an important next step toward a bold, new Yahoo — smaller, nimbler, more profitable and better equipped to innovate. Our goal is to get back to our core purpose — putting our users and advertisers first.”
Yahoo said its job cuts will save the company $375 million a year when they are completed. It expects to take a $125 million to $145 million charge this quarter for severance costs.
Thompson is aiming to do something his recent predecessors — including Carol Bartz, who was forced out in September — have repeatedly failed to do: articulate a vision of what Yahoo is.
The Internet’s first giant portal has retained a massive user base, but has lost its edge in nearly every field to newer, nimbler rivals. The company gave up on search in 2009, and it’s losing ground in display advertising to new entrants to the market such as Google (GOOG, Fortune 500) and Facebook.
Thompson’s busy 2012: Wednesday’s layoffs come three months to the day that Thompson took over at Yahoo — and his tenure has already been a busy one. In February, four longtime board members, including chairman Roy Bostock, announced they would not seek re-election.
Exactly one week after that, activist shareholder Daniel Loeb and his hedge fund Third Point launched a proxy fight. Third Point, which owns a 5.56% stake in Yahoo, is proposing four new Yahoo board members, including Loeb himself.
Mere weeks later, in March, Yahoo filed a lawsuit against Facebook. The high-profile suit alleges that Facebook infringed on 10 of Yahoo’s patents related to advertising, privacy, customization, messaging and social networking.
Facebook called the lawsuit “puzzling,” while outside critics decried the move as “pathetic” and “desperate.”
Still, considering that his predecessors failed at fixing Yahoo, Thompson clearly knows he has to make bold moves. Whether they’re enough for the long-promised but so far elusive Yahoo turnaround remains to be seen