Yahoo to cut 2,000 jobs, eyes $375 million savings

by Darcie | Wednesday, Apr 4, 2012 | 394 views

In a move stipulated to create  “ a bold, new Yahoo — smaller, nimbler, more profitable and better equipped to innovate as fast as our customers and our industry require.” by Chief Executive Scott Thompson , Yahoo Inc. on Wednesday  said that it plans to cut down on 2000  jobs in the hope of saving $375 million a year . The anticipatory plan which has been tagged as a move to redeploy its resources( manual more than technical ) around the globe and gear up efforts on the part of the management which has seen the shares going down by 5 % since January .

The move is being marked as more on the lines of revenue growth than that of profitability . The markets also responded in a like fashion with the stocks going up fractionally to $15.27 . The “phase transition “ step as termed by the Sunnyvale, Calf- based company more than a “job elimination” move will be taken to the affected employees soon.

Analysts have warned that the move , might lead to demoralization among the workforce. The constant headcount reduction has been a part of the Yahoo culture and talented professionals wouldn’t want to continue in an environment of uncertainity when ample number of oppurtunities are present on the West Coast.

Thompson said that the focus is to move agrressively towards a selected few core businesses with top priority for its users and advertisers , the supporting platforms of these businesses and returns for its investors . The achievement of the goal , would unfortunately require harsh decisions like cutting down on the jobs. Thompson had earlier said that they had revisited all the business areas and the prime focus will be on sectors like content , communications and live media along with  platforms supporting these entities and data generation from its  700 million user base. Hence anything that shall not be related to any of these key sectors would be currently over-staffed.

The move which is amongst one of the biggest restructuring at Yahoo till date is being seen as one of the initial steps of the game plan that Thompson has to execute to bring the Internet giant back on its track. Its share in the online and advertisement market has fallen from 16 % in 2009 to 9.5 % in 2011. While the market is staged to grow at 23 %  from present $32 million to $ 40 million , Yahoo’s market share is expected to further fall down to 7.4 % .

Third Point , which will be challenging the board for company directors in elections , criticized the move saying that rampant and frequent cuts are likely to egress senior level emlpoyees which could dampen the shares in the coming months  and it is  disappointed that the move came before the CEO articulated his game plan .

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