Gauging the Impact Of Yahoo's Imminent Layoffs

TechCrunch, Tuesday, January 22, 2008 2:15 PM
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Rumors of Yahoo's imminent layoffs started as whispers on the blogosphere Monday, but now they've grown into roars by major media outlets like The New York Times and The Wall Street Journal. What's known is that CEO Jerry Yang has to shed some blood to bolster Yahoo's position with shareholders and financial analysts; what's not known is just how many heads will have to roll.

Some have pegged the number at about 500 layoffs, while others have speculated 1,500 or more (roughly 10% of the Web giant's workforce). Erick Schonfeld says that while it may be hard to stomach axing that many dedicated Yahoos, making too few cuts will do nothing to bolster the tanking stock, and may actually worsen morale.

Schonfeld estimates that at a hypothetical (but plausible) $100K per head, slashing the workforce by 1,500 would net Yahoo about $150 million for the year--equal to the Web giant's entire net income in Q3 07. Still, if Yang & Co. cut too deep, it may keep shareholders happy, but at the expense of stifling Yahoo's future growth. Talk about a rock and a hard place.

 


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