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Yahoo Saving $375M by Eliminating 2,000 Workers

By - Source: Yahoo! | B 23 comments

As part of a company restructuring, Yahoo is informing 2,000 workers of job eliminations and phased transitions.

As predicted, Yahoo announced on Wednesday that it's now notifying approximately 2,000 people of job eliminations or phased transitions. The layoffs are due to an internal restructuring that will ultimately simplify how Yahoo builds, launches and maintains many of its properties and products. Yahoo expects to realize approximately $375 million of annualized savings upon completion of all employee transitions.

"Through its restructuring efforts, Yahoo! intends to grow by responding more quickly to customer needs and competing more effectively in areas where it can win," the company stated. "Yahoo! has identified key parts of the business -- a select group of core businesses, the platforms that support those core businesses, and the data that drives deep personalization for users and ROI for advertisers -- where the company will intensify efforts and redeploy resources globally, all focused on increasing shareholder value."

Reports of changes within Yahoo surfaced earlier this week, claiming that executives were planning a major corporate reorganization that could lead to thousands of layoffs. Scott Thompson, CEO of Yahoo and former president of eBay's PayPal unit, was also reportedly making changes to get the company back on course and rebuild the empire. He took the Yahoo throne back in January, insisting that he would put the company's users and advertisers first.

Yahoo was once king of Search Engine Land before Google came along and stole the show. The former champ has seemingly struggled ever since, and even saw CEO Carol Bartz kicked out of the company last September. Since then, Yahoo co-founder Jerry Yang has hit the road along with board chairman Roy Bostock and three other directors. That said, a restructuring isn't all that surprising.

"Today's actions are an important next step toward a bold, new Yahoo! -- smaller, nimbler, more profitable and better equipped to innovate as fast as our customers and our industry require," Thompson said. "We are intensifying our efforts on our core businesses and redeploying resources to our most urgent priorities. Our goal is to get back to our core purpose -- putting our users and advertisers first -- and we are moving aggressively to achieve that goal. Unfortunately, reaching that goal requires the tough decision to eliminate positions. We deeply value our people and all they've contributed to Yahoo!."

Despite falling behind Google and Facebook, Yahoo claims it has a foundation of nearly 700 million users and thousands of advertisers that engage with Yahoo properties regularly and trust the company with their data and their business. But will the restructuring and customer focus bring it back into a more positive light? One thing is for certain: the company needs to start things off right by cracking down on the spamming taking place on Yahoo Instant Messenger. It also doesn't need to produce another social network... there's plenty now as it is.

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  • 11 Hide
    phamhlam , April 4, 2012 10:42 PM
    It is interesting how they cut 2,000 jobs but they still gave the CEO a $50 million check.
  • 10 Hide
    kensingtron , April 4, 2012 10:28 PM
    What the Mr F! That's $187,500 per person. Also typically 10% of an earning demography will be earning 90% of the money; which equates to $1,662,500 for the top 10%. Wait, it's probably a little less as that only leaves $20,800 each for the remaining 1,800 people.
Other Comments
  • 10 Hide
    kensingtron , April 4, 2012 10:28 PM
    What the Mr F! That's $187,500 per person. Also typically 10% of an earning demography will be earning 90% of the money; which equates to $1,662,500 for the top 10%. Wait, it's probably a little less as that only leaves $20,800 each for the remaining 1,800 people.
  • 5 Hide
    omega21xx , April 4, 2012 10:34 PM
    kensingtronWhat the Mr F! That's $187,500 per person. Also typically 10% of an earning demography will be earning 90% of the money; which equates to $1,662,500 for the top 10%. Wait, it's probably a little less as that only leaves $20,800 each for the remaining 1,800 people.


    I was thinking the same thing... Sounds like maybe they let go people that didn't justify the pay they were given.
  • 11 Hide
    phamhlam , April 4, 2012 10:42 PM
    It is interesting how they cut 2,000 jobs but they still gave the CEO a $50 million check.
  • 1 Hide
    kensingtron , April 4, 2012 10:44 PM
    Keep trimming that fat yaho *snip o
  • 0 Hide
    kensingtron , April 4, 2012 10:51 PM
    phamhlamIt is interesting how they cut 2,000 jobs but they still gave the CEO a $50 million check.
    It probably went down like this:

    Accounts: "We seem to be a little short on the executive bonuses this year sir"
    CEO: "We should be able to take it out of the "H".. "R".. budget this year
    Accounts: " Please don't fire me : ("
  • 0 Hide
    ta152h , April 4, 2012 10:55 PM
    kensingtronWhat the Mr F! That's $187,500 per person. Also typically 10% of an earning demography will be earning 90% of the money; which equates to $1,662,500 for the top 10%. Wait, it's probably a little less as that only leaves $20,800 each for the remaining 1,800 people.


    The cost per person is not the amount of money someone is getting paid. Think of all the benefits (especially health insurance), and how quickly they add up. Now consider the cost of actually having facilities for people, and the costs for equipment. Those buildings themselves require insurance, taxes, and maintenance, even if they're owned. If not, the rent is another cost.

    The amount of money someone actually gets paid is substantially less than the cost of that employee, especially now.
  • -2 Hide
    jackbling , April 4, 2012 10:59 PM
    when i was younger(different/more reasons now), i stopped using yahoo mail because of the word yahoo, doesn't scream cool/professional.

    I have nothing against the company, but i haven't been to yahoo(intentionally) in years.

    I imagine google will become long in the tooth eventually; as a company grows in size/demographic it becomes more difficult to innovate, or better justify innovation to share holders.
  • 0 Hide
    kensingtron , April 4, 2012 11:16 PM
    TA152HThe cost per person is not the amount of money someone is getting paid. Think of all the benefits (especially health insurance), and how quickly they add up. Now consider the cost of actually having facilities for people, and the costs for equipment. Those buildings themselves require insurance, taxes, and maintenance, even if they're owned. If not, the rent is another cost. The amount of money someone actually gets paid is substantially less than the cost of that employee, especially now.


    I would have though that it was purely a wage saving, all the additional cost's you mentioned should be covered by their positions contribution to the company. I for example contributed a gross $33k to my company, of which I get paid a tiny fraction, $4200 covered promo/advertising and such for that week and so on...
  • 4 Hide
    confish21 , April 4, 2012 11:41 PM
    I knew a girl in college who worked for yahoo and she never stopped bragging about how much better yahoo was over google. I continue to hope for the best for her.
  • 6 Hide
    ehaser , April 4, 2012 11:43 PM
    Did they fire Chris Chase?
  • 0 Hide
    Khimera2000 , April 5, 2012 1:47 AM
    Well... that tells me that Yahoo is boned. If the only way to swing a good profit after all this time is to shrink the company, I for one will be avoiding there stock like the plague. Its no surprise though, I only check my Yahoo account to make sure its not canceled, and Google/ Bing have replaced them entirely for my search of choice, and most of my Email traffic is through Gmail, mostly... hell I use Hot Mail more then Yahoo these days, and that's just because of the Log In convenience for windows accounts.

    Yahoo hasn't came out with a compelling product in a really long time... sucks really I remember using them exclusively for years (around the time GeoCity peaked, and HotMail was snogged by MSN), they had the momentum back then, to bad they didn't do anything with it.
  • 0 Hide
    magnetite , April 5, 2012 3:58 AM
    These CEOs should put themselves in their workers shoes. It might be saving them money by laying off people, but it's not fun for an employee being out of work for months. I'd like to see a CEO get laid off or fired. Least they would have millions of dollars to live off of in severance pay or otherwise. We don't have such luxuries as employees.
  • 1 Hide
    lathe26 , April 5, 2012 5:06 AM
    If Yahoo had been smart, they could have gotten $18.2 Billion if they had harvested organs instead of just eliminating (using U.S. FDA 2011 number of $9.1 million per person).
  • 0 Hide
    martel80 , April 5, 2012 7:16 AM
    kensingtronWhat the Mr F! That's $187,500 per person
    Salary is not the only cost a company pays for each employee. What about the rent and equipment for the workplace?
  • 0 Hide
    psaus , April 5, 2012 9:01 AM
    martel80Salary is not the only cost a company pays for each employee. What about the rent and equipment for the workplace?


    Agreed; a very loose math you apply is take a worker's salary and x2. That's the cost to the company. A company that is going to contribute to 401k/alike, proper healthcare, and then every company has disability and other taxes, and costs for "usage"; electricity, MIS support, etc.

    Therefore 93k then apply higher and lower salary ranges - well with in reason IMO. Go look at the thousands of VPs in the music and video industries drawing idiotic salaries. Hence the RIAA rampage. :) 
  • 0 Hide
    fuzznarf , April 5, 2012 12:12 PM
    phamhlamIt is interesting how they cut 2,000 jobs but they still gave the CEO a $50 million check.

    Obviously you're a demagogue and you don't understand how business works. For starters he makes a base of $1 million. The board fired the old CEO because he sucked and was running the company into the ground. They had to then find a new guy who was willing to right the ship. Someone who had a track record, the connections, and the expertise to turn things around. It turns out that in order to get someone like this they had to offer him a lot of money. They found Scott Thompson and in order to get him to leave his job at Paypal had to WRITE A CONTRACT PROMISING 1 million and UP TO 27 million IF he performs.

    Amazing how Albert Pujols doesn't employ anyone, plays a game for a living, makes 20 times as much, and isn't responsible for tens of thousands of employees, and yet the class-envy crowd doesn't get angry at them like they do CEOs who actually do something.
  • 0 Hide
    kawininjazx , April 5, 2012 1:05 PM
    Don't forget Yahoo has to match every employees social security, probably pay benefits, probably bonuses, payroll costs, etc. That's on top of their salary.
  • 0 Hide
    Anonymous , April 5, 2012 1:36 PM
    Wow. If they save that much by letting 2,000 go, just think how much they could save by getting rid of everyone! - he said facetiously.
  • 0 Hide
    teddymines , April 5, 2012 2:20 PM
    Someone should write a book on MBA-speak that always accompanies these kinds of announcements. I'm don't have an MBA, but can write a phony one with the best of them:

    "These reductions are essential in order for our company to maintain its competitive advantage, while striving to keep our business costs low. This will enable us to maximize shareholder value and customer experience by combining cross-functional infrastructure business areas in order to implement in a more agile method the cutting-edge products and services for which Yahoo is known. These synergies, along with focused drive toward increasing revenues through established and emerging sales channels, will propel Yahoo to the position of market leader and revenue champion."

    This is much better than just admitting: "Our expenses are too high, so we need to lay off some people."
  • 1 Hide
    bucknutty , April 5, 2012 2:34 PM
    kensingtronWhat the Mr F! That's $187,500 per person. Also typically 10% of an earning demography will be earning 90% of the money; which equates to $1,662,500 for the top 10%. Wait, it's probably a little less as that only leaves $20,800 each for the remaining 1,800 people.


    I was thinking along those lines as well. Maybe they are moving out of some office buildings and saving money on rent too?
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