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.