Yahoo cuts could give Yang breathing space
Yahoo could save about $100 million if its cut its workforce by an expected 700 posts next week, JPMorgan analyst Imran Khan estimated.
Besides trimming Yahoo's expenses, job cuts could help buy Yahoo Inc Chief Executive Jerry Yang more time to carry out his strategy to re-establish the company as a main entry point to the Internet and create a more compelling online advertising network.
An anonymous source said on Tuesday that the Sunnyvale-based company's purge of 5 percent of its workforce, the biggest since the dot-com bubble burst, will most likely be announced next week.
Many investors had been questioning whether Yang was too emotionally attached to the company that he started in 1995 to make the tough decisions needed to turn it around, said Standard and Poor's equity analyst Scott Kessler.
"A lot of what drives the market comes down to perception and, rightly or wrongly, there is a perception that Yahoo needs to be repaired," Kessler said.
From Wall Street's perspective, the layoffs are long overdue. Through September, Yahoo generated just under $364,000 per employee, well below an average of nearly $565,000 per employee at six other major Internet companies, including Google Inc and eBay Inc, Khan calculated.
News of the looming job cuts didn't lift Yahoo's stock on Tuesday amid rising recession worries. Yahoo shares fell to a new 52-week low of $19.27 before rebounding to close at $19.92, down 86 cents or 4.14 percent.
Yahoo shares have dropped 28 percent since the company tapped Yang to replace Terry Semel as CEO in June.
Google shares have climbed 14 percent in the same period.
AFP
(China Daily 01/24/2008 page16)
