Yahoo Inc. (YHOO) is set to begin a huge round of layoffs on Wednesday as the Internet company tries to cut costs, according to media reports on Tuesday.
The company's move, expected to be announced before the stock market opens for trading in New York, is likely to impact up to 2,000 employees, or about 14 percent of its total workforce.
The layoffs are said to be part of a massive restructuring at Yahoo by its new chief executive officer Scott Thompson. A former executive at Ebay Inc.'s (EBAY) PayPal unit, Thompson has reportedly hired Boston Consulting Group recently to help focus the company on growth initiatives and to help determine the best path for Yahoo going forward.
The layoffs are expected to cover all the departments of Yahoo, including its marketing division and products group, which builds and maintains new Yahoo websites and mobile apps. The products group is headed by Blake Irving.
The proposed job cuts may also target research, marketing and public relations and other areas that are not considered central to Yahoo. The company has a large number of software contract workers who could also be impacted by the shakeup.
After the layoffs on Wednesday, Yahoo will likely announce a new organization by next week. Yahoo is also reportedly considering selling some of its assets, including its advertising technology platforms like the Right Media ad exchange.
Yahoo is looking for ways to increase efficiency following a failed turnaround effort under former CEO Carol Bartz, who was fired in September 2011. The company, which offers most of its products free, requires more of ad revenues to boost its performance.
Even though display advertising is a bright spot, the company is facing tough competition in search business from Google Inc. (GOOG) and also from increasing popularity for social networking sites such as Facebook.
Yahoo continues to lose search market share to Google, and has not been able to increase revenues even as the Internet ad market expands by more than 20 percent annually. In late January, Yahoo reported a drop in fourth-quarter profit, reflecting a decline in revenues and a higher tax provision.
Yahoo is also fighting other external battles. On Sunday, Yahoo said it has appointed three new independent directors after failing to reach a compromise with its largest shareholder, hedge fund Third Point LLC, which owns about 5.15 percent of the company's shares.
Following the appointment, Third Point said in a statement the it "intends to move forward with a proxy contest."
In addition, a patent face-off between Yahoo and Facebook intensified after the social networking site Tuesday filed a counter-suit in a Californian court accusing Yahoo of having indulged in patent violations. It follows a recent lawsuit by Yahoo that Facebook impinged upon its innovations.
YHOO closed Tuesday's trading at $15.18, down $0.27 or 1.78 percent on a volume of 18.22 million shares.
by RTT Staff Writer
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