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And So the Yahoo Layoffs Finally Begin. But a New CEO? Not That Soon

Posted by: Rob Hof on December 10, 2008

In a blog post starkly titled “Tough times,” Yahoo cofounder and CEO Jerry Yang announced that the embattled Internet icon’s long-awaited layoffs have begun. Yang’s memo to the depleted troops follows after the jump. But by now, with the layoff already announced in October, there’s not much new to say, and while I’m sure he’s sincere, Yang’s farewell sounds pretty boilerplate. (UPDATE: Yahoos and others, let us know in comments below or email me what you’re hearing from the front.)

This morning, Yahoo folks who haven’t been called into individual meetings with managers are waiting tensely and hoping they’ll still have a job by this afternoon. Those with a morbid fascination with what really has been an inevitable cost-cutting move by Yahoo can catch up with anonymous Yahoos venting on Silicon Alley Insider. If their comments are to be believed (and I don’t question most of them), the 1,500 or so layoffs, about 10% of the workforce, are coming throughout the world, from Sunnyvale headquarters to Oregon to New York and Cambridge.

They’re hitting a wide variety of operations, from the small-business operation to the former Right Media ad exchange. Among the casualties, I’ve confirmed, is Brickhouse, Yahoo’s innovation incubator in San Francisco, which opened early last year with a lot of fanfare. Most of the small staff there is leaving. Although Brickhouse produced some promising products such as Fire Eagle, a way to publish your physical location on the Web, it clearly wasn’t enough.

There are some other clues from former Yahoos and others posting on Twitter. But hey, it could be worse: Those departing from Yahoo HQ are getting free tacos and potential job offers from a company called TokBox.

I gather from sources at Yahoo that while most folks getting laid off are being notified today, some in overseas locations may hear later, thanks to differing laws and procedures on layoff notifications. Offices in Dusseldorf, Hamburg, Stockholm, Amsterdam, Oslo, and Copenhagen are closing. Overall, Yahoo expects to have cut some $400 million in costs, or about 10%, by year-end, including non-layoff cuts in some projects.

And as Chief Financial Officer Blake Jorgensen implied during Yahoo’s third-quarter earnings call, Yahoo isn’t ruling out more layoffs next year as it continues to look at where to cut costs. Some of those cuts could come in smaller field offices with small numbers of people, often a dozen to three dozen staffers.

Meantime, the drama continues on other fronts as well. Ivory Investment Management, a Yahoo institutional shareholder, came out with a recommendation, backed by some questionable numbers, calling for Yahoo to do a search deal with Microsoft.

But that’s unlikely to happen at least until a new CEO is chosen to replace Yang, who recently said he would step down. I gather from Yahoo sources that, despite a spate of stories implying that pick could happen soon, it’s more likely to be announced in January or even early February. After all, the holidays loom, so while it’s possible Yahoo may move more quickly, don’t bet on it. Yahoo’s board is still looking at several candidates and hasn’t yet settled on one, let alone made any offer.

Anyway, it’s not clear Yahoo’s board as a whole is ready for such a move, despite pushes in that direction by new director and activist investor Carl Icahn, who has at least two allies on the board. Nor is it yet apparent that Microsoft CEO Steve Ballmer is ready with a deal that’s sufficiently more appealing than the last two rejected offers.

Here's Yang's memo, his notorious lower-case style intact:


today, most of our layoffs in the US are happening, and they’ve been underway in other regions around the world. 

this is a tough time for all of us and i wanted to take a moment to reach out to you.

saying goodbye to colleagues and friends is never easy. they all are dedicated members of our yahoo! family, who worked beside us and shared our passion. 

but as you all know, we must take actions to better perform in today’s turbulent global economy. while we’ve found efficiencies in many parts of our business, laying off employees is unfortunately unavoidable. our difficult decision to let colleagues go reflects the changes we’re having to make to better align costs with revenues – something businesses in virtually every sector are also having to do. 

for those who are affected by these layoffs, i am extremely grateful for your contributions to yahoo!. we realize the impact this will have on you. that’s why, consistent with our past practices, we’re making every effort to support you with severance packages and other services. 

the reductions we’re making are very hard, but they are also very necessary — as we focus on the long-term health of our business. to those who are leaving us, i extend my heartfelt thanks on behalf of yahoos everywhere — you will be missed.



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Reader Comments


December 10, 2008 04:17 PM

One of my good friends is one of the yahoos to be let go today. And I just got let go last week from my internet advertising firm. Tough times indeed.


December 10, 2008 04:55 PM

They could have been enjoying being a member of Microsoft empire. They could have afford decent X-mas gifts to their lovely kids. What a twisted management decision can make difference!


December 10, 2008 05:06 PM

life sucks but god got something better waiting for all the millions of people who got laid off

magnet agency dot net

December 10, 2008 05:24 PM

compound this with CBS digital, NBC/Viacom/IAC and countless others and it's been a week from hell right in front of the holiday season. I run a search firm in NYC catering to digital and I haven't had a second to breathe all day as resumes and calls are coming in like gangbusters. We're talking top performers as well. Fortunately, many of them have in demand skills, so it's not as bad as it is for Investment Bankers and dare I say, automotive employees, should the wheel fall off in Detroit.


Chuck Gaffney

December 10, 2008 05:46 PM

Just more proof that the corporate ladder is nothing but an unsteady, overcrowded, fragile, wooden ladder that in many cases is also leaning on the wrong building. Sad how our whole lives school, college, and society likes to paint that "ladder" as a sturdy safe-haven that is supposedly our "only choice" in life. I feel sorry for all those who will be laid off. I hope they find a job but we all need to learn from all these layoffs happening that we simply can't rely on someone else to run our lives! This economic time is showing everyone who fell for it that the rug can so easily be pulled underneath our feet.

Samuel Chaboya

December 10, 2008 06:14 PM

This is part of Microsoft's plan to get back at yahoo for not forking over the company.


December 10, 2008 07:57 PM

@Yanghoo!: A very insightful point. A full merger with Microsoft would have certainly prevented massive layoffs from occurring.

Instead, Microsoft would have embraced the resulting redundancy to make pair programming a mandatory practice.

Going one step further, they would have also created new work methodologies such as pair financing, pair HR and pair managing, to leverage the most of each companies' respective culture.

You, sir, are a genius. I hear Yahoo! is looking for a new CEO and you seem like an excellent fit. You should seriously think about it.


December 10, 2008 10:54 PM

Chuck Gaffney's comment reminds me of why I work for myself.(aside from the fact that I really am unemployable) Job security at any corporation is directly related to the company's need of the employee's skill set. Anyone who really believes they are working for a "family" or a "caring community" is probably already too far to gone to rehabilitate. Corporations are highly organized greed, and if you think someone above you is going to give something that is "his" up because you are a member of the "family", well, you'll probably believe the HR guy at your next "Family".

It isn't about family, community or caring and sharing. It's about the survival of the company, meaning the bottom line.

When one begins to realize that the corporation is a separate entity it becomes clearer that this is a divorce, and that there are actually three players. You, her or him, and the relationship. Each will protect its own turf and power base.

Like HAL, Yahoo will do what it has to to survive and remain "plugged in".


December 11, 2008 01:20 AM

Jerry Yang's worst decision in life is not being bought out by Microsoft. It was a lucrative deal in these turbulant times and also Microsft is a stable empire. Jerry, you will be remembered for the screw-up.


December 11, 2008 12:30 PM

Gosh! Jerry's notorious lower-case style to me shows a person who may not even care about the people he is writing the memo for. It shows arrogance and disrespect.

I can imagine him typing with two fingers...

Michael Murdock

December 13, 2008 10:03 PM

Too bad they're dragging their feet. Everyone is under the impression that this job takes a college degree and an MBA. It doesn't. I can do it with 1 eye closed and 1 hand behind my back, but...Yahoo won't answer the phone! the place with a story by the guy who can bring this company back faster, has a plan, has a team, has a vision and has passion...oh and actually WANTS the job.

Michael Murdock, CEO


December 19, 2008 05:51 AM

People always hate to talk about when they are laid off. But as it has become every day's news headline since Yahoo started it with cutting 1500 of its task force last year, now a need of platform has been in demand where people can express their selves in words how they are feeling about their company, whey the got laid off was that justified or not.
And every thing they want to tell anonymously.And is providing you that platform.


December 20, 2008 03:55 AM

People always hate to talk about when they are laid off. But as it has become every day's news headline since Yahoo started it with cutting 1500 of its task force last year, now a need of platform has been in demand where people can express their selves in words how they are feeling about their company, whey the got laid off was that justified or not. And every thing they want to tell anonymously.

And is providing you that platform.

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BusinessWeek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, Douglas MacMillan, and Spencer Ante dig behind the headlines to analyze what’s really happening throughout the world of technology. One of the first mainstream media tech blogs, Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.



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