It’s Time for Yahoo’s Annual Layoffs

During the past two years, Yahoo has reserved one annual date for laying off hundreds to thousands of people. It’s about time for the struggling Internet company to cut back again, just in time for the holidays. The Wall St. Journal reports that Yahoo is planning on cutting 5% of its workforce, or 650 jobs:

The cuts will be targeted at Yahoo’s products group, which builds Web properties like the company’s popular news, sports and finance pages, as well as its widely used email service. The group, which recently had about 7,000 employees, is run by chief products officer Blake Irving, a former Microsoft Corp. executive who joined Yahoo in April.

Mr. Irving had previously asked unit heads to prepare operational plans that factored in work force cuts of up to 20%, one person familiar with the matter said. Mr. Irving said in a recent interview that he wants the products group to work more closely with regional teams, so they share common goals and responsibility for achieving operational and financial targets.

Yahoo’s turnaround effort has seen it strike a search pact with Microsoft, enabling the Internet giant to focus on its core website properties and its display-advertising business. But Yahoo has continued to struggle with soft ad sales, especially in North America, the company’s most important region. In October, Yahoo said third-quarter revenue rose 1.6%, with revenue from owned and operated display advertising jumping 17%, while search ad sales fell 7%. The company at the time said its third-quarter earnings more than doubled.

Incidentally, the rumored Yahoo-AOL merger is off, according to Search Engine Land:

The would be AOL-Yahoo merger is apparently off, according to Crain’s New York Business. The site is reporting that “AOL tried to either get enough backing to make a run at Yahoo, or get Yahoo interested in buying it . . . Yahoo didn’t bite, and AOL didn’t have its ducks lined up to be a buyer.”

Earth to Yahoo: What on earth is your strategy? The company has been through three CEOs, a few purchases–notably news site Associated Content–and lots of layoffs, but still doesn’t seem to have any clear direction. That’s dangerous in today’s hypercompetitive economy. Unless they get a turnaround specialist in ASAP, I wouldn’t be surprised to see this ship go under or get bought out in the next several years.

Yahoo needs to convince Wall Street and advertisers that it is more than simply an aggregator of content or gateway to other sites that users will spend more time on — and it needs to prove that soon.

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