Yahoo Turnaround Still Means Massive Layoffs

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A great deal of fuss was made over the Yahoo! Inc. (NASDAQ:YHOO) appointment of Marissa Mayer as CEO during the Summer. She was hired to turn the company around, and after two months of analysis and planning she finally addressed the firm’s employees last week, conspicuously missing from that address was any mention of layoffs.

Yahoo Turnaround Still Means Massive Layoffs

According to, the absence of layoff plans in that address does not mean the company is not planning for any. During his tenure as CEO of the company, Scott Thompson planned the removal of around 2,000 employees from the company’s payroll. The rude interruption, formed by questions of his integrity, delayed those plans.

According to a source inside Yahoo, cited by SFGate, layoffs cannot be ruled out, and in all likelihood will form a major part of the new CEO’s turnaround strategy. Mayer hired Ken Goldman as her CFO. His record speaks for itself. His areas of expertise are cost cutting and preparing companies to be sold.

Yahoo’s strategy going forward, outlined by Mayer in her address to employees, will apparently concentrate on mobile, personalization and changing the way the company works internally.

Projects that are seen to have a future will be fast tracked, while products that are not will go away much more quickly. Employees at the company will face a higher degree of personal responsibility. Projects that cannot scale to 100 million users, or $100 million will not be green lit.

Yahoo! Inc. (NASDAQ:YHOO) certainly needs an internal makeover, but in order to save the business, cost cutting will be essential. The firm’s current structure is unsustainable. Layoff’s are almost impossible to avoid at Yahoo, the real question is how many people will lose their jobs.

Yahoo! Inc. (NASDAQ:YHOO) employs 18,000 people worldwide. Thompson’s plan to lay off 2,000 of them will probably form a base for the new management team to work off of. A source inside Yahoo told SFGate that the company should get rid of as many as 10,000 of its employees, in order to reinvigorate the company.

The lack of a mention of layoff’s in the new CEO’s address last week was more than likely an attempt to negate the effect it might have on morale. According to a source cited, morale at the company is now higher than it has been in years.

Marissa Mayer has been charged with re-establishing Yahoo! Inc. (NASDAQ:YHOO) as a leader in the tech space. In order to achieve that, she cannot possible take lay offs off of the table, and, according to insiders and analysts alike, must embrace them.

Mayer gave birth to a baby boy on late on Sunday night. Yahoo’s shareholders will be eager to see her back at work, taking the reigns of the floundering company. A leaner Yahoo, with far less non essential employees, is what many are hoping to see in the coming years.

Whether Mayer is shaping the company for a future sale, or to become a force in its own right, lay offs are a necessity. As Yahoo! Inc. (NASDAQ:YHOO) management reveals its plans to the public in the coming weeks, details will emerge as to the number of employees the company will seek to shed.

Investors will be waiting with bated breath.

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