Happy Holidays! Yahoo to fire another 5 per cent of its workforce

Dec 14, 2010

Word has it that the demoralised and marginalised web portal company Yahoo will be axing yet more jobs later today. It seems a further 650 US staff are to be "let go" - just in time for Christmas. Martyn Warwick reports.

Carol Bartz, Yahoo's current chief executive, has, so far, not been as effective in the post as was expected of her and is regarded by the company's board and institutional investors as being very much on probation - perhaps even sufferage - as she flails about trying to right a badly listing and leaking ship.

The 650 job losses equate to 5 per cent of Yahoo's remaining workforce as the company continues to slim itself into a state of dangerous anorexia. And, irony of ironies, most of the cuts will hit Yahoo's products arm (the part of that designs and constructs consumer and advertising services) which is the fiefdom of Blake Irving who Bartz lured away from Microsoft just eight months ago.

Carol Bartz has a reputation as a ruthless, cold and abrasive manager much given to the use of colourful language. In January 2009, just days after she was appointed as Yahoo's putative saviour, she told financial analysts that she intended to ensure that "Yahoo gets some frigging breathing space" so that she could reorganise the company to "kick some butt." Infamously she also declared her intention to “drop-kick to fucking Mars” any Yahoo-er who spoke to the press without her express authority.

In its pre-Bartzian days Yahoo was renowned for its free flow of information up and down the chain of command but that structure has been replaced by one of "need to know" secrecy that has resulted in further demoralising an already worried and wobbly workforce. Today's cuts won't make the those remaining feel any more secure.

As at the end of October, Yahoo had 14,100 employees.

It's hard to see what anyone can do to make Yahoo more relevant and trendy in a changed world. The company lost out to Google in the search market and significantly failed to respond to the opportunities and challenges of social networking despite the fact, recently acknowledged by the CEO, that the company once considered buying Facebook for a billion dollars.

Recently, Bartz said, “Our greatest competitor probably is Facebook, even more so than Google" before adding, “They [Facebook] are a hot site, but there’s room for more than one of anything.” Perhaps that's true but Yahoo doesn't show signs of becoming a credible Facebook rival or even an also-ran wanna-be. To date Yahoo has not proven itself capable of even keeping pace with, never mind anticipating, Web trends.

Look at the facts: Facebook’s user base is now half a billion and rising and its share value is in excess of US$40 billion. Yahoo's market capitalisation of $22.1 billion and falling.

Carol Bartz though remains bullish and claims that Yahoo’s advertising sales will “start really taking off” in 2012. But that "jam tomorrow" promise is two years in the future. Whether the market and shareholders are prepared to wait that long remains to be seen - but the odds must be that they won't.

When Ms. Bartz was appointed as CEO of Yahoo, Rob Hof of Business Week wrote, “It’s not yet clear if Bartz can turn Yahoo around no matter how good she may be.” That remark is as pertinent today as it was in January 2009.



Post a Comment