Yahoo (YHOO): More Details on Potential Mass Firings*

Henry Blodget | January 20, 2008 7:54 AM

Last night we reported a tip that Yahoo has created a list of 1,500-2,500 jobs that may be cut within two weeks and that Jerry Yang will make the decision to go ahead with the layoffs--or not--this week. We have now received additional details from the same source, who has been reliable in the past. Our source's understanding of the situation is this:

Layoffs:

The "list" is reportedly the product of a Q4 project in which all group heads were asked to look at redundancies and create their own lists of potential cuts. All the group-level lists have now been turned in to corporate.

The decision to go ahead with lay-off is said to be largely dependent on stock price: Yahoo's stock trading in the low $20s has gotten Jerry's and president Sue Decker's attention. Jerry will feel vulnerable if the stock goes into the teens and will try whatever he can to prop it up. He's not ready to give up the CEO job, sell-out, or shop the company around at this point.

Update on Peanut-Butter Manifesto (a.k.a., Yahoo's stifling bureaucracy)

Jerry is reportedly trying to speed up the time that decisions are made and how fast new products get released. Jerry and other execs are finally admitting that management by committee does not work. The new, more rapid decision making process is gathering momentum internally and is promising but still has a ways to go.

Outlook for the Company

Our source believes Jerry & Co. have a chance of pulling off the turnaround and allowing Yahoo to survive as a stand-alone company. So do we. Although it is hardly fun to "root" for a large layoff, we continue to believe it would be a smart move for the company and a smart move for Jerry.

We hear the "Jerry's too nice a guy to do what it takes" refrain from people very close to the situation, and a tough, initially unpopular move like this would strengthen his leadership position, both inside and outside the company. If executed well, we believe it would also improve morale for the rest of the company. ("Finally, a leader who demands excellence again!")

Yahoo is not in the same situation as AOL: It still has a strong brand and a cohesive, growing business. With the right leadership, it can still be saved.

*UPDATE: Yahoo Mass Layoff Plan Confirmed: Exact Number TBD

Know more? We'd love to hear from you! Please post below or send to hblodget@alleyinsider.com. Anonymous submissions fine and appreciated, but to help us assess the info, please tell us as much as you can about where it is coming from.

Followup: Alternate Yahoo Strategy: Cut Search, Not People
See Also:
Tip: Yahoo May Cut 1,500-2,500 Jobs Within Two Weeks
Fat Yahoo Finally Cutting Bloat...Slowly
Yahoo Layoffs: Drumbeat Grows Louder
Yahoo Turnaround Step 2: Layoffs

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Well, not that Microsoft has made an offer, what does it mean? Does it mean more layoffs in the future or a better consolidation.
More layoffs could be due to overlapping domains. But, can Microsoft afford to layoff Yahoo core R&D engineers or will it be more at the management level?
It may be too early to get a fine grained response but I guess it is time to start speculating.

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come on Microsoft show us your offer!!

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FedUp said:

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It's a shame Terry Semel couldn't just give back some of the millions he obviously didn't deserve instead of Yahoo firing its workers. Seems some of that company's biggest problems lie in an inability to support it's customer base or properly manage too many assets. Having 20% less bodies to accomplish this certainly won't help. Especially considering the lack of motivation the average Yahoo employee is going to posses after even more work is lumped on them, while their higher ups still make millions. Thanks to option shenanigans, that's true whether the stock holders are losing money as usual too. It's win-win for those at the top of Yahoo's pyramid of power and gross mismanagement complex. Maybe all those employees should take their severances and invest them in buying back the company once the stock is abundantly cheap and plentiful soon. They are the only ones that truly seem to care about the company anyway. The execs are just milking it until it's sold later this year.

frustrated!! said:

Jan. 21, 2:44 PM

Jim the Peon is right and obviously worked at Yahoo as I did. He got it right! The story talks about Jerry turning things around I don’t think he can as Jim points out. As a stock holder, I am tired of waiting for Yahoo’s Management to get it right, they get it so wrong most of the time as we have seen over and over again. Yahoo is a great company with the wrong management team. At this point I would love for MSN to announce what their offer was for Yahoo to the public, I want someone like Carl Icahn to step in and get the share holders what they deserve! I have a large position in Yahoo and am tired of waiting for the big win, frankly I don’t care what Jerry wants it should not be his decision and the less than stellar management team is not going to get us there.

Rick James said:

Jan. 21, 11:14 AM

I hate to make this obvious joke(actually no I don't); but come a couple of days, Jerry is goin' to be firin' out the ying Yang. xDDDD. HAHAHAHAHAHA.

Rick James said:

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I hate to make this obvious joke(actually no I don't); but come a couple of days, Jerry is goin' to be firin' out the ying Yang. xDDDD. HAHAHAHAHAHA.

risk:reward said:

Jan. 21, 1:06 AM

JimThePeon, you make some valid points about the history. in fact up until semel's departure, filo was still coding the front page himself. geez. i doubt he is now though.

jerry was always very active on the biz dev. front and was instrumental in many deals. interestingly, jerry often played devils advocate. so he does have some balls.

one very large variable that you left out of your analysis is the fear factor. the prime motivators for corp leaders are typically money and ego. jerry and david have recently awakened to the fact that they could lose their baby. i believe they will do whatever neccessary to prevent that from happening.

btw, i hear jerry is slowly but surely beginning to see who is who. the mgmnt by comm. approach peaked in q4. with the stock now dangersously close to the teens jerry and co. is for the first time ready to pull out all the stops (pardon the pun). i just hope its fast enough. apparently the phrase, "the fight for our life" has been heard at top....which is a marked change from the past complacency.

personally, i'm giving yhoo until this spring to show their stuff.

Garbanzo said:

Jan. 20, 10:19 PM

I previously worked for one of the two women at the top. In order to avoid slander, I'll avoid saying who, but what I will say is that she's a classic example of "failing up." Frankly, not a big fan of i-bank alums running media companies (seem to be hired more for their Wall Street connections than actual sense).

JimThePeon said:

Jan. 20, 10:02 PM

Here is the issue with Yahoo: the founders Yang & Filo are nice guys. But they never *really* ran Yahoo. They created the original site alright, but today's Yahoo resembles *that* original directory (remember that word?) about as much as a Boeing 747 resembles the Wright brothers plane. By comparison, what Brin and Page created is still at the heart of Google. It was really Tim Koogle & Jeff Mallet(remember them?) who assembled - that is the correct word - what is today Yahoo.

The founders did not make the big decisions for the most part - Filo ran the nuts-and-bolts data center stuff, stuff like using BSD, run it on as little hardware as possible etc. for which I give him credit - but strategy and vision was all Koogle and Mallet, during the crucial late 90's when Yahoo became Yahoo.

Understanding that history is crucial to understand Yahoo's cultural DNA. I respectfully submit that neither founder has the breadth and depth to take on the challenge of turning Yahoo around. Sue Decker is Meg Whitman 2.0 - enough said.

Yang, who is in the hot seat now, is a smart guy, but at a very fundamental level, he doesn't *know* who is *really* good and who is not at Yahoo, even among the executive ranks, leave alone in the crucial middle management. As an example, Jeff Bezos knows that to this day in Amazon.

I cannot emphasize how crucial that kind of knowledge is. Lacking that knowledge, you simply don't know who to trust your key initiatives with. So what do you do? Simply play it safe, run everything by a committee, let Sue set up "metrics" and "process", and trust that she knows what she is doing (the Meg Whitman types are impressive on the surface compared to the Bezos types, but compare EBAY vs AMZN over a 10 year period to know how that turns out).

The occasional (very occasional, I must add) cool stuff that comes out of Yahoo happens because there are still passionate Yahoos out there, but they are leaving at a rapid rate.

I am very pessimistic that any of this is going to change. I would love to have a Jeff Bezos in charge of Yahoo, but I guess he is happily married to Amazon. May be he should acquire Yahoo, after they spin off their Japan/China holdings, which will make them affordable to AMZN!

Henry Blodget said:

Jan. 20, 6:21 PM

Can't believe the job cuts would all be there. Even if they cut that many (which seems extreme based on the numbers I ran), they'll almost certainly be worldwide.

Bjorn Tipling said:

Jan. 20, 2:34 PM

If those 2,500 layoffs happen here in San Jose, I think that's going to be quite a shock to everyone that works in this town. Maybe a sign of things to come? Both Facebook and Slide have crazy evaluations.

Yahoo (YHOO): More Details on Potential Mass Firings*

Henry Blodget | January 20, 2008 7:54 AM

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