Yahoo Layoffs Set for December 10 (And, No, Jerry Yang Is Not Leaving Too)
by Kara Swisher
Posted on November 14, 2008 at 5:55 PM PT
While they’re not as significant as the potential 6,000 layoffs at Sun Microsystems (JAVA) announced earlier today, several sources at Yahoo said that the previously announced layoffs at the Internet giant are set to take effect on Dec. 10.
Yahoo (YHOO) confirmed it would cut its workforce by “at least” 10 percent of its global workforce–or about 1,400 to 1,500–on Oct. 21, as part of its third-quarter earnings call. But it did not give an exact date for the action.
That 10 percent figure is still the number being cut, said sources, although the company–as all tech outfits suffering in the current economic meltdown–could be forced to make more reductions if the outlook worsens.
That’s not likely for now, but such a large cut will still have a major impact at the company, which has not had to make a lot of cutbacks over its history.
Thus, not such happy holidays at Yahoo’s Sunnyvale, Calif., HQ.
But someone who is not leaving–at least not quite yet, despite the persistent rumors over the last week–is Yahoo CEO Jerry Yang.
As Yahoo’s share has dropped this week to $10 a share, a spate of rumors swirled inside and outside the company about the fate of Yang, and also President Sue Decker.
But sources said that neither is leaving the company at this point and both are focused on ongoing plans to improve its fortunes. That includes a possible deal to merge with Time Warner online unit AOL.
Talks about a merger have been ongoing, but the pair are still far apart on price. Sources at both companies said Time Warner (TWX) wants $6 billion for AOL, while Yahoo wants to pay a little more than half that, in the $4 billion range.
Price is a bigger issue than ever, since Yahoo’s market valuation has dropped so significantly and the deal would involve Time Warner getting a percentage of the combined company.
That said, if the pair can come to terms on price, having done a lot of due diligence already, with AOL and Yahoo execs involved in extensive meetings, Yang could bring a deal to the board by next week.
If combined, of course, there would be more layoffs in the consolidation of the pair.
But, for now, that will just be limited to Yahoo.
In an interview with BoomTown a few weeks ago, Yang said about the cuts:
We want to do it before the holidays, which is why we wanted to let people know that it would affect 10 percent [of Yahoo's workforce]. But we also want to make sure that we are cutting to be more effective and not cutting for cutting’s sake.
We have been growing costs for the last few years while we were investing in new products and platforms, and we have also made a lot of acquisitions and additions. There have been redundancies and geo-consolidation that we had not addressed that we are doing now. I know that sounds generic, but doing this is really important.
I look at these cuts as both a short-term and long-term effort. In the short term, we have consolidation and organizational corrections to make. In the long term, we will look at our whole portfolio and are now asking ourselves in each case if we need to be in this business.
We’re asking ourselves–should we sell it or should we shut it down? That is the kind of comprehensive look we are doing across the company.”
In other words, more changes to come for Yahoo.
Comments
Kara,
In what can only be described as “disappointing” ( to coin Yang’s phrase about the Google debacle), the fact that Yang is still in charge means that any hope we had at avoiding the $8 per share mark, is lost. By any matrix, Yang is a failure. It’s even more certain based upon his comment to you that “he accomplished most, if not all, of what he set out to do” Given that he hit $9.72 a share, one can only wonder what the hell it was he set out to do? That said, he spent SEVENTY TWO MILLION DOLLARS of our money fending off MSFT’s FIFTY BILLION DOLLAR offer. He doubled down on Google, who most reasonable people never believe would do any more then provide Yang a few months worth of cover. They gave him a rope, and Yang hung himself with it. In football, a quarterback is judged by Super Bowl rings, in boxing the champ is judged by KO’s, in baseball the manager is judged by wins and loses, and so on and so forth. On Wall Street, the CEO is judged by one measure, and one measure alone: Stock preformance. When Yang turned down $31 a share he knew, or should have known that he damn well better preform. We’re at $9 and some change. He hasn’t preformed and needs to go. If a General Manager of a team spent $73 MILLION Dollars of the owners money fending off a free agent, and then wound up in last place, everyone with a brain would be calling for his head, and rightfully so. Yang is, and has been, a complete and utter failure, and there is no compelling reason for him to remain at the helm. That said, I FINALLY got a call back yesterday from YHOO Investor Relations. They mind as well be Yang’s parrot: ” We’re not looking backwards”; “We didn’t walk away MSFT did”; “We’re disappointed that Google didn’t fight harder”. BTW, what does Yang have planned to increase shareholder value in light of his failures? “We don’t agree Yang failed, but we have no vision into the future” In short, typical PR flack that said NOTHING, which is indicative of Yang’s tenure: Be “nice” but fail at all costs.
Posted by Mike Kane at November 14th, 2008 at 7:52 pmKara,
I love your blog, but I hate your comment section that doesn’t allow you to finish typing a sentance before it skips back to a previous paragraph. Horrible. That said, back to Yang’s failures. It is almost comical, if it weren’t so expensive, to revisit how incredibly drastic that his failure(s) are. I mean, how the hell does anyone defend spending SEVENTY MILLION DOLLARS, in “expert” fees, in order to turn down FIFTY BILLION DOLLARS? BTW, has anyone considered that after we sue Yang into oblivion, suing these expert advisors for malpractice? It still escapes me as to how Icahn can be 50 million shares long at $25 and put up with Yang’s BS. Yang is the captain of a rudderless ship in the midst of a hurricane. He’s in way over his head; his competitors know it; his shareholders know it; and frankly, just about everyone in the world, save for Sue & Roy, know it. He needs to be the 1st of the 10% to go.
Posted by Mike Kane at November 14th, 2008 at 8:09 pmKara,
It’s true, Yahoo’s had some rough sledding of late. As a longtime shareholder I would prefer $31 to $10 any day. Remorse is a powerful emotion. But with everyone piling on, perhaps some perspective is in order.
First, Microsoft’s offer was a combination of cash and stock. Since the offer, Microsoft’s stock is down 30% (Yahoo’s is down 60%). So, even before getting into all of the “could have, should have’s,” the standard comparison seems a bit misleading.
Second, since the market bottom in October 2002 Yahoo is still up 50%. Microsoft is down 20%. The New York Times is down 80%.
Yahoo is still a great brand. At this price, their upside potential seems considerably greater than their downside risk. Time to buy?
All the best -
Rolly Rouse
Posted by Rolly Rouse at November 15th, 2008 at 5:46 amCo-founder
HomePortfolio.com
I love the new Yahoo. And I love Yahoo’s new direction…No, wait! Yahoo hasn’t changed. My bad, I meant to say I love the new AOL and I love the new Windows Live. How’s that future working out for you Yahoo?
Posted by Timothy Bevil at November 15th, 2008 at 9:34 amYou are such a hater, Kara!
Posted by Nathaniel Dimtricus at November 15th, 2008 at 1:56 pmI have the solution…. Lay off half the employee’s. Or lay off more so that the amout of their pay, is more than the earned revenue… or more… I don’t know the figurs, but …. Just lay off a zillion people… they the stock will jump again, because you laid everyone off… … I would then recommend selling all your stock and moving on…. Problem solved.
Posted by gary cotugno at November 15th, 2008 at 5:34 pmbeating yahoo is like spanking a dead monkey
kara, find something else to talk about, this is about as stale as bill clinton’s cigar collection, and we all know where those have been
Posted by Sam Harrison at November 16th, 2008 at 7:06 pmIt was delightful to see Bill and Steve sharing a stage and reminiscing about their stuff, but I was surprised that Bill (gadgets) and Steve (widgets) didn’t settle the debate about the original inventor of the widget.
One can never have too many widgets. Somebody codes something you never even dreamed of wanting – suddenly everybody
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