Yahoo will lay off 1,400 workers

October 21, 2008 10:51:47 PM PDT
Yahoo says it will fire at least 10 percent of its work force during the next two months to cope with a crumbling economy that dented its third-quarter profit.

With that comes word of some serious cuts. Yahoo! employees understand 10 percent of them will lose their jobs by year's end, and that's just the beginning.

This is the second round of layoffs for Yahoo! this year. In January, the company slashed 1,000 jobs, and this time the cuts go even deeper ? at least 10 percent of the job force.

The job losses at yahoo will be painful. At least 1,400 employees will be out of work by year's end. Charles Synegal can only hope he's not one of the casualties.

"It's not something I can worry about. Nothing I can do. Deal with it," said Synegal.

In a conference call on Tuesday, yahoo's CEO Jerry Yang says the cuts are necessary to try and save $400 million by the end of the year.

"Like all companies facing these difficult decisions, we are mindful of the impact on affected employees. We will make every effort to ease the transition for the yahoos by providing separation packages and job placement services," said Yang.

Yahoo! has been struggling for three years and Yang blamed the current economic crisis for making the slump even worse.

Last year, Yahoo! had third quarter earnings of just over $151 million. Tuesday's third quarter numbers are down a dramatic 64 percent to just over $54 million.

Karsten Weide is a tech sector analyst with IDC.

"Yahoo! is facing a number of pretty though challenges. I think today's layoffs go in the right direction, and I also think that the cuts don't go deep enough," said Weide.

Yahoo's dominant competitor Google is also dealing with the online advertising slowdown. Late Monday, Google CEO Eric Schmidt told Bloomberg they have absolutely no plans for layoffs.

"We're slowing our rate of hiring. We're being more careful about how we spend and we're trying to make sure our priorities are right," said Schmidt.

Yahoo! on the other hand says it will continue cost cutting moves well into next year, including the possibility of relocating and consolidating some of its operations.

Despite an uncertain future, Yahoo! employees are trying to stay optimistic.

"I think the exciting thing about yahoo is that we stay focused and people continue to rally and try to make an impact and that's what we're doing right now," said Yahoo employee Jim Nieters.

Many investors are furious that Yahoo! did not accept the buyout bid from Microsoft this year for $33 a share. Yahoo! stock is now down to $12 a share, and there is still a possibility of a partnership between Google and Yahoo is being scrutinized by the Justice Department.

Yahoo! says that deal to run some Google ads could boost its revenues by $800 million.


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