Yahoo is planning to make the easiest and quickest cost cutting action by slashing hundreds of jobs globally. Yahoo is expected to announce full details of its job cuts tomorrow, however it is likely that over 1000 positions will be axed. As with the rest of the economy, Yahoo’s stock price has plummeted recently, falling 55% to just under $13. Only 10 months ago Microsoft offered Yahoo shareholders $31 a share in a takeover bid. The Yahoo board declined this offer, stating that Yahoo was expecting growth and improvements. However product development costs lead to an 18% drop in 2nd quarter profits this year. In an attempt to appease shareholders, Yahoo employed Bain & Co. to analyse its operating model to increase efficiency and reduce costs. Yahoo currently employs approximately 14,000 people, so is looking to reduce staff costs by around 10%.
Yahoo has already slowed its recruitment, allowing it to cut about 30 recruitment companies from its payroll, and managers have been asked to seek ways to reduce operating costs by 15% by looking at cost effectiveness and continuous improvements within their own sections of the company.
Yahoo has been in talks with the media giant Time Warner AOL, with a possible partnership whereby Time Warner would become a minor stakeholder in Yahoo. With the continuing economic crisis now affecting the technology and information industry, this deal must be looking more appealing now for Yahoo!
