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Yahoo Plans Hundreds of Layoffs: Source

Yahoo is planning to lay off hundreds of employees in an effort to increase its profitability, prop up its deflated stock price and narrow the focus of its sprawling Internet portal to a smaller number of crucial areas, people close to the company said Monday.

The final number of layoffs from Yahoo’s work force of about 14,000 is yet to be determined and is likely to be announced around the end of the month, perhaps during Yahoo’s conference call on Jan. 29 with analysts after it reports fourth-quarter results, these people said.

Company executives are still trying to determine exactly which areas will be cut. One person close to the discussions said a final plan, or perhaps a few alternative plans, would be submitted to the board at a coming meeting. The plan’s final shape may be influenced by the company’s fourth-quarter performance, this person said.

Yahoo declined to comment specifically on any plan for layoffs. In an e-mail statement, a company spokeswoman, Diana Wong, said: “Yahoo plans to invest in some areas, reduce emphasis in others, and eliminate some areas of the business that don’t support the company’s priorities. Yahoo continues to attract and hire talent against the company’s key initiatives to create long-term stockholder value.”

The statement echoes a strategy sketched out in recent months by Jerry Yang, the company’s co-founder, who was appointed chief executive last summer amid growing shareholder dissatisfaction.

After a 100-day review of the company, Mr. Yang said in October that Yahoo would focus on three areas: becoming a “starting point” for the most consumers on the Web; extending its advertising offerings to sites across the Web; and opening up Yahoo’s technology infrastructure to third-party developers and publishers.

The strategy is aimed at revitalizing Yahoo, which has been eclipsed by Google in Internet search, and has faced increasing competition from social networks like MySpace and Facebook.

As a result, Yahoo’s share of the overall online advertising market has declined. Still, the company remains a powerful force on the Internet, with about 500 million people visiting its sites around the world each month.

Company executives have said that to achieve its “starting point” goal, Yahoo would continue to invest in areas like Internet search, e-mail, the Yahoo front page and the personalized home-page service MyYahoo, as well as news, finance and sports.

Some other areas would be de-emphasized. In recent months, Yahoo said it would phase out or consolidate services like photos, premium music, auctions and Yahoo 360, a largely unsuccessful social network.

During the weekend, some blogs reported that Yahoo was considering layoffs of 10 to 20 percent of its work force. But the people close to the company, who discussed Yahoo’s layoff plans on condition that they not be identified, said the cuts would most likely be in the hundreds.

The last time Yahoo had sizable layoffs was in 2001, after the dot-com crash. During the last year, the company added several hundred people, some through hiring and some through acquisitions of companies like the online advertising specialists Right Media and BlueLithium and the e-mail provider Zimbra.

Mr. Yang and other Yahoo executives have said recently that they believe that those acquisitions and a series of reorganizations have primed the company for a turnaround. But they have cautioned that financial results may not improve quickly. They have also said they believe Yahoo can succeed as an independent company, amid growing speculation that the company could become a takeover target.

With the stock price sliding, Mr. Yang and the board may see layoffs as necessary to ensure that the company can indeed remain independent. Yahoo shares have lost more than half of their value since early 2006, closing Friday at $20.78.

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