Crunch Grips Yahoo, Will Decimate Staffers

23 October 2008

SUNNYVALE, California: As the credit squeeze coils around the world's businesses, Yahoo plans a decimation (the noun is used in its literal sense – every tenth person) of the ailing search portal's 15,200-strong workforce.

The cull is triggered by a fragile third quarter financial performance, in which revenues totalled $1.325 billion (€1.11bn; £786.96bn) net of payments to partners. This lagged analysts' averaged expectations per Reuters Estimates of $1.369bn. 

Yahoo ceo Jerry Yang admitted that robust growth in Yahoo's search advertising business had not been matched by display advertising.

"Demand for branded display advertising slowed further in the US with weakness in categories such as finance and retail, where marketers are becoming increasingly cautious, as well as geographic weakness in branded advertising in Europe and Asia."

These grim economic realities mean that Yahoo has to 'accelerate' efficiencies. The company's projected $3.9bn annual overhead will  be slashed by $400m by the year's end, hence the draconian cut in Yahoo's workforce where headcount had risen by 1,400 to 15,200 during the past two quarters.

This, said Yang, is the first step of a programme to reduce costs, including the relocation of operations and the consolidation of Yahoo's real estate. Further cuts could not be ruled out.

Meantime, talks continue with Time Warner and Google about possible alliances.

Data sourced from Financial Times; additional content by WARC staff