Yahoo has announced 14 percent in cuts to its workforce, issuing 2,000 pink slips in a move that will save the company $375 million.
What’s more, sources close to the matter told AllThingsD that the layoffs were “just the tip of the iceberg” to hit the massive Titanic of a site in the months to come.
Though the layoffs are expected to affect all regions of the company, the brunt will be felt by the product division, headed by Blake Irving. The company is also planning a major reorganization of the company in the near future.
“Today’s actions are an important next step toward a bold, new Yahoo! – smaller, nimbler, more profitable and better equipped to innovate as fast as our customers and our industry require. We are intensifying our efforts on our core businesses and redeploying resources to our most urgent priorities. Our goal is to get back to our core purpose – putting our users and advertisers first – and we are moving aggressively to achieve that goal,” said Yahoo’s CEO Scott Thompson. “Unfortunately, reaching that goal requires the tough decision to eliminate positions. We deeply value our people and all they’ve contributed to Yahoo!.”
It’s one of the largest cuts Yahoo has made in recent years. The company last cut 4 percent of its workforce in December of 2010.
Yahoo maintains a solid foundation of 700 million users and thousands of advertisers, but it nevertheless struggles to compete against better leveraged advertising platforms such as Google and Facebook. Yahoo is hoping its restructuring efforts propel it to better respond to customer needs and compete more effectively in markets than it has in the past.
The company recently sued Facebook over patent infringement, quickly earning itself a reputation as a patent troll out for blood.
Though it hasn’t passed out from user depletion like MySpace, Yahoo will need to completely rethink its strategy as more people connect to news through Facebook and other social sites. Bloodletting and patent trolling won’t be enough. Without some new ideas, the company will be condemned to stagnation at best, or extinction like the dinosaurs if it fails to adapt.