According to sources close to the situation, Yahoo has instituted a hiring freeze across the company and is considering a reduction-in-force in support units of the company.
While the details of any layoffs — which are expected to be small and selective for now — are still being worked out, sources said that the stricture not to fill hundreds of open positions is the first step toward significant cost-cutting initiatives across the Silicon Valley Internet giant, in the wake of what it expected to be another weak quarterly report next week and a looming proxy fight.
Yahoo reports its fourth quarter earnings Tuesday. While the company has managed to improve the results in the last part of the quarter, sources said they will still show continued weakness in its key businesses and consumer usage.
That’s as competitors such as Google and Facebook are expected to show significant growth, especially in the display advertising market.
Thus, new Yahoo CEO Scott Thompson appears to be zeroing in on costs and managing for margins, said multiple sources, much as his predecessor Carol Bartz did at the start of her tenure.
But many think Yahoo needs even more drastic changes, including massive cuts in staff and also product arenas, to give the company new life.
That includes shifts in leadership at the top levels too. In a major move this week, Co-founder Jerry Yang stepped down from the company’s board and all roles there. More directors are expected to leave soon too.
That will likely come after negotiations to sell part of its lucrative stakes in both the Alibaba Group and Yahoo Japan are successfully completed.
While not a certainty, Yahoo’s board hopes that will happen sometime before activist shareholder Daniel Loeb initiates a proxy battle against the company in the coming month.
At the end of its last quarter, Yahoo reported that it had 13,700 staffers, down from 14,100 in the previous year.