Yahoo Laying Off About 600 Employees

This week’s rumors are true: Yahoo began laying off several hundred employees today.

Reuters is reporting that most of the cuts affect about 600 employees, or 4% of Yahoo’s workforce. The layoffs, as expected, will come from Yahoo’s product division.

This week’s rumor mill had suggested the layoffs would hit about 650 people, or 5% of the Yahoo workforce, so it appears that the actual numbers are slightly lower. Rumors that circulated a month ago pegged the cuts at between 10%-20%.

Yahoo confirmed today’s cuts in a statement, saying they’re “part of our ongoing strategy to best position Yahoo! for revenue growth and margin expansion and to support our strategy to deliver differentiated products to the marketplace.” Yahoo says it will continue to hire worldwide “to support our key priorities.”

This is the second time in the past three years that Yahoo has laid off employees during the holiday season. An estimated 1,500 employees were let go in December 2008. Last year, Yahoo reportedly compelled employees to take time between Christmas and New Year’s Day by using up vacation days or unpaid leave.

Postscript by Barry Schwartz: AllThingsD has a copy of the internal memo sent to Yahoo employees over the 4% layoff. Here it is:

Yahoos,

I want to share some tough news with you. Today, we began notifying some Yahoos that they will lose their jobs. Most of the reductions will come from the Products org and, when completed, will affect about 4% of the company.

I know this has been rumored for some time. It’s disappointing when things like this leak, and it certainly doesn’t make it any easier for anyone involved. This was a tough call, but a necessary one. We need to make these changes now to ensure that Products is structured and running the way we want as 2011 begins. And that means we need fewer Yahoos in some areas, and different types of Yahoos in others.

There are several reasons for this. First, we’ve found a lot of duplication in work between Products and the regions. Second, it’s no secret that we’re cutting investment in underperforming and non-core products so we can focus on our strengths (like email, the homepage, search, mobile, advertising, content and more). And lastly, we need to get the Products cost-structure in order so it aligns with our development plans for next year and beyond.

You’ve heard me say before that I didn’t come to cut Yahoo! to greatness. That’s still true. This decision is about more than cost savings. The changes are meant to get us into a position so we can invest more in the kind of products and technology we know we need to be successful. The process that begins today–along with Blake’s past org changes and new Products operational plan–helps to get us there.

It’s never easy to say goodbye to Yahoos we know and work with, especially before the holidays. Please know that we’re helping those affected with severance pay and benefits, plus services to help them find other jobs.

One last thing before I go: It’s important to put this in perspective, and remember that we’re making good progress on our turnaround. Margins have expanded. Revenue growth has stabilized after a long period of decelerating trends. Product rollouts are accelerating as we modernize our infrastructure. Our Search alliance with Microsoft continues on schedule, and more.

We’ve got a lot of potential, but there is still a lot of work to be done. Let’s stay focused and not lose sight of that.

Carol