More Layoffs Coming at Yahoo

Well, nobody really thought new Yahoo CEO Carol Bartz would simply dial up Microsoft CEO Steve Ballmer with a deal proposal and leave it at that, did they? And so she isn’t. According to sources, Bartz is preparing a plan to cut several hundred people as early as next Tuesday, when Yahoo reports its first-quarter earnings.

The cuts were first reported in the New York Times a few minutes ago. A Yahoo spokesman says the company doesn’t comment on “rumor and speculation.”

I’m told the plans haven’t been made final yet. But if they’re the several hundred I gather are being contemplated, that’s a significant but not enormous layoff. Yahoo ended last year with 13,600 employees after two rounds of layoffs in early and late 2008 totaling about 2,400 people. However, it had continued hiring in some areas.

Still, the cuts, which Yahoo had hinted last December might be necessary, would be a clear sign not only of Bartz’s influence, which included a recent management shakeup, but of Yahoo’s continuing struggles. For the past two years or so, it has been losing more and more ground the search ad giant Google. That led to Microsoft launching a hostile bid for Yahoo early last year, which distracted management and accelerated the departure of more top executives and engineering talent—some to Microsoft.

Meanwhile, its mainstay display-ad business has stagnated, mostly thanks to the proliferation of advertising networks that help marketers reach prospective customers far more cheaply than on Yahoo’s marquee home page and other frequently visited pages. More recently, despite a better-than-expected fourth quarter, Yahoo and much of the online ad industry have seen new pressures from the recession.

Even Google is expected to report worsening conditions in search advertising during its first-quarter earnings call Thursday. But the impact is expected to be especially pronounced at Yahoo thanks to the falloff in display-ad sales. That’s why few people will be surprised when more layoffs are announced.

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