• Silicon Alley Insider, Monday, January 28, 2008 11 AM

During its earnings call tomorrow, Yahoo CEO Jerry Yang will announce substantial layoffs totaling anywhere between several hundred to more than 2,500. Silicon Alley Insider's Henry Blodget, who supports the decision, runs five different scenarios at a cost of $125K per employee to assess the financial impact of these layoffs.

Blodget assumes that the appropriate number of cuts is 1,000, which would return operating profit to its level one year ago, reducing overhead by more than $125 million. If the cuts are more aggressive than that, and a source tells him that it will be, then 1,500 cuts would result in an operating profit increase of around 20 percent. Meanwhile, 2,000 cuts would increase operating profit by 26 percent or more, and 2,500 cuts would boost profit by 30 percent. However, several assumptions were made in Blodget's analysis, which he acknowledges here.

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