Is this the beginning of Yahoo!’s end?
US – Yahoo! CEO Scott Thompson is reportedly close to making “significant” layoffs as the company restructures itself amidst falling revenue.
A majority of those layoffs – which could total in the thousands and are expected to be announced in the coming weeks – will come from Yahoo!’s projects divisions, and parts of PR, marketing, research and regional projects.
Yahoo! has not been able to confirm the reports, but a spokesperson said, “As we have indicated, our leadership is engaged in a process that will generate significant strategic change at Yahoo, but final decisions have not yet been made at this point.”
However, analysts are warning layoffs are not the end-all solution for Yahoo!. "I wouldn't say there is fat to be cut. I would say there has to be a transformation of the company," Ben Schachter, who follows Internet companies for Macquarie Equities Research, told Mercury News. "They cannot continue to conduct business as they have for the last 10 years."
He added Thompson has to “change the strategic goals and focus on big growth opportunities”, rather than “tweak things and make small changes”.
Thompson is also struggling to sell off Yahoo!’s Asian assets, as investors are putting pressure on the company to either exit or reduce its share in the Asian market. However, talks between Yahoo! and China’s Alibaba Group and Japan’s SoftBank seem to have hit a wall.
But Thompson has promised Wall Street analyst he is looking into improving the company’s profit margin by aggressively evaluating “all options”, including shifting resources to new initiatives. Yahoo! has also hired Boston Consulting Group to focus on projects with larger growth potential.
Yahoo! also announced earlier this year five longtime directors, including co-founder Jerry Yang and Chairman Roy Bostock, would be stepping down.
But dissident investor Daniel Loeb, whose Third Point investment firm controls 5.6% of Yahoo!'s stock, has said he lacks confidence in the remaining board members. Loeb has also said he plans to run his own line up of four candidates for Yahoo!’s new board.
Yahoo! also made waves when he threatened to sue Facebook over intellectual property, with Thompson breaking the news to The New York Times almost the same time they gave Facebook notice. Many have called it a publicity stunt made by a company desperate to regain its public footing and market relevancy.
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