As expected, Yahoo began laying off more than 2,000 employees on Wednesday morning -- roughly 14 percent of the company's total workforce -- in its effort to slim down and pivot its focus in a new direction.
"Today we are restructuring Yahoo! to give ourselves the opportunity to compete and win in our core business," said Yahoo CEO Scott Thompson in a statement to his employees. "The changes we're announcing today will put our customers first, allow us to move fast, and to get stuff done. The outcome of these changes will be a smaller, nimbler, more profitable Yahoo! better equipped to innovate as fast as our customers and our industry require.
"Unfortunately, reaching that goal requires the tough decision to eliminate jobs, which means losing colleagues and parting with friends. Today, we will begin the process of informing employees about these changes. As part of that effort, approximately 2,000 people will be notified of job elimination or a phased transition. We value our people and for those who will be leaving, we thank you for all you have contributed to Yahoo!. We will treat all of our people with dignity and respect, providing resources to help manage through their transition."
Yahoo, which is based in Sunnyvale, Calif., said it will save about $375 million per year once the layoffs are fully completed later this year. Yahoo said workers losing their jobs will be notified Wednesday, but "some" employees will stay on for an indefinite period of time to finish various projects.
"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," Thompson said.
This mass layoff marks the sixth time in four years -- and under three different CEOs, no less -- that Yahoo has dumped employees. However, this housecleaning will be the biggest one yet; the second-biggest layoff in Yahoo's history came in 2008, when 1,500 workers were laid off to cut costs during the country's deep recession.
Since Thompson joined the company three months ago after running eBay's PayPal service, Yahoo has seen some major changes. Founder Jerry Yang left the company, and so did four other members of its board, including chairman Roy Bostock. The shake-up has cleared the runway for five new directors to join Thompson's new-look board, which he hopes to feature 10 members.
Thompson has also stirred the pot in other ways at Yahoo. He recently picked a fight with Facebook, the world's most dominant social network, over 10 Internet patents, with faint hopes to bring in more money. Facebook has since denied Yahoo's allegations, and has returned fire with its own patent infringement suit, announced on Monday.
Daniel Loeb, the hedge fund manager who is also one of Yahoo's largest shareholders, has launched a new campaign to shake up Yahoo's board even further since being spurned by the company. Loeb has been trying to persuade Yahoo to elect him, as well as three other alternative candidates, as possible directors. If a truce isn't met between Loeb and Thompson, the dispute will be put to a shareholder vote at Yahoo's annual meeting.
In his letter to employees, Thompson tries to assure all that this chaos is in the best interest for Yahoo's ability to compete.
"Change is never easy," Thompson said. "But the time has come to move Yahoo! forward aggressively with increased focus and accountability. Our values have always been about treating all Yahoos with dignity and respect, and today is a day to embrace those values. This is an amazing company with exceptionally talented people and I know we will all do our best to encourage each other through this difficult period of transition."
Here is the full text from Scott Thompson's letter to his employees, courtesy of WSJ.com.
Yahoos -
Today we are restructuring Yahoo! to give ourselves the opportunity to compete and win in our core business. The changes we're announcing today will put our customers first, allow us to move fast, and to get stuff done. The outcome of these changes will be a smaller, nimbler, more profitable Yahoo! better equipped to innovate as fast as our customers and our industry require.
Over the last 60 days, we've fundamentally re-thought every part of our business and we will continue to actively consider all options that allow Yahoo! to put maximum effort where we can succeed. As part of this process, I believe we have to focus to win in a select group of core businesses globally:
Core Media and Communications: Our content, media, and communications experiences must be best in class. That includes getting today's core properties right and innovating on a next generation of great product experiences across all screens.∙
Platforms: We must make our core platforms and systems a genuine strength for Yahoo! - platforms that we can really leverage to support our massive scale, drive the deepest personalization, and boost speed to market.∙
Data: Our massive data sets must become a genuine competitive advantage for Yahoo!. We have to unlock the value in our data to allow us to really understand our 700 million users, encourage and win their engagement and trust, leverage everything they do with us to more fully personalize their experiences, and to give our advertisers the immediate insights they are rightfully demanding.
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 jobs, which means losing colleagues and parting with friends. Today, we will begin the process of informing employees about these changes. As part of that effort, approximately 2,000 people will be notified of job elimination or a phased transition. We value our people and for those who will be leaving, we thank you for all you have contributed to Yahoo!. We will treat all of our people with dignity and respect, providing resources to help manage through their transition.
Change is never easy. But the time has come to move Yahoo! forward aggressively with increased focus and accountability. Our values have always been about treating all Yahoos with dignity and respect, and today is a day to embrace those values. This is an amazing company with exceptionally talented people and I know we will all do our best to encourage each other through this difficult period of transition.
Scott
Yahoo will announce its first quarter financial results on April 17. The company's shares rose 12 cents to $15.30 in early morning trading.
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Source:IBTimes
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