'Deep' layoffs expected at Yahoo

New CEO Scott Thompson expected to announce major job cuts

One of the first things any shrewd new chief executive of a struggling company does is cut costs. It's obvious, it's easy (for the CEO, anyway), and it buys time. Also, it almost always involves layoffs.

And just like his predecessor in the corner office at Yahoo, Scott Thompson apparently figures it can't hurt to reduce the payroll while he tries to figure out a viable strategy to make the stumbling Internet pioneer relevant in the mobile/social age.

According to All Things Digital's Kara Swisher, "multiple sources both inside and outside" Yahoo say that Thompson "is preparing a massive restructuring of the company, including layoffs that are likely to number in the thousands."

Yahoo is no stranger to layoffs in recent years. It cut about 150 jobs in January 2011, after hacking 650 to 700 full-time positions a month earlier. And in 2008, about 1,600 Yahoo employees lost their jobs.

That was the year Yahoo's board realized it couldn't turn around the company with co-founder Jerry Yang at the helm. So the board hired former Autodesk CEO Carol Bartz in January 2009. Within four months, she had cut 5% of Yahoo's workforce, or 675 jobs, as part of her well-articulated strategy to enable the company to "kick some butt." She should have specified whose butts were in for a kicking.

Now it sounds like Thompson, who became CEO in early January, four months after Bartz's own butt got kicked, is planning to hack even deeper.

Yahoo currently has about 14,100 employees, almost exactly how many it had in November 2010, despite subsequent layoffs. From Swisher's report, it sounds like every division and project at Yahoo must make an economic case for its survival, both product and non-product (PR, marketing, research).

Supposedly layoffs and organizational restructuring could be announced by the end of March. Don't be surprised if there are more in the months after; it seems as if Thompson is willing to make big changes.

Yahoo, of course, has had stagnant revenue and share price for several years now as it has been eclipsed by Google and Facebook as a favorite destination for online advertisers. This has led to shareholder uprisings and turmoil on the board, from which four directors last month announced their resignation.

Shares of Yahoo (NASDAQ: YHOO) were down 10 cents, or 0.7%, to 14.62 in late Monday trading. Since the beginning the year, Yahoo shares are down 9.4%.

Last September I wrote a post titled, "Now would be an excellent time for Yahoo employees to jump ship." I hope some of them did. To those who didn't, good luck.

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