Yahoo Planning Big Job Cuts?

Over the past several days, a number of blogs (PaidContent, Silicon Alley Insider, TechCrunch) have reported and speculated (based on tips) that Yahoo was contemplating significant job cuts, perhaps as many as 2,500.

Yahoo’s Q4 earnings call is scheduled for January 29. If results disappoint, it’s likely there will be some “strong medicine” to try and satisfy investors. According to speculation at Silicon Alley Insider:

The decision to go ahead with lay-off is said to be largely dependent on stock price: Yahoo’s stock trading in the low $20s has gotten Jerry’s and president Sue Decker’s attention. Jerry will feel vulnerable if the stock goes into the teens and will try whatever he can to prop it up. He’s not ready to give up the CEO job, sell-out, or shop the company around at this point.

Although widespread, it remains to be seen how accurate these layoffs rumors are.

Many analysts have claimed that Yahoo is overly bureaucratic, with too many layers of management inhibiting decisive action. Yahoo has an estimated 12,000 employees. Many on Wall Street would likely welcome news of job cuts as an effort to streamline the organization. However, job cuts at this level could meet with a negative reaction internally and be a temporary distraction for employees, as various reorgs have been in the past.

Assuming the rumors have some truth, it’s fair to say that CEO Jerry Yang is caught in a difficult balancing act, seeking to protect and preserve employee morale and trust while satisfying investors and increasingly vocal external critics.