What Yahoo's Looming Costs Cuts Actually Mean (Not as Many Layoffs as You Think)
A lot has been written about the need for drastic layoffs at Yahoo, including reports that the troubled company was preparing to fire from 3,000 to 3,500 of its 15,000 employees.
As dramatic as that figure is, according to numerous sources, it’s more likely that Yahoo will cut only half that, beginning sometime in mid-December.
That date could move up, of course, depending on how bad the economic outlook get for Yahoo, but it is not likely Yahoo will make any move in front of its earnings next Tuesday, October 21.
Why? Well, because what Yahoo’s top brass has already done is given its managers cost-cutting targets and not specific marching orders on laying off a certain number of people across the board.
And that’s even if the management consulting company that Yahoo has hired to look over the company’s operations, Bain & Co., recommends more.
In addition, the figures that top execs–such as SVPs Hilary Schneider and Ash Patel–have handed down to their minions is a process that includes considerable negotiating and maneuvering among and between various managers. So, nothing is set in stone.
Thus, how Yahoo (YHOO) under-bosses reach those goals and what gets lopped does not have to necessarily be employees.
For example, a manager could table a project in the search area or perhaps not expand features planned.
Of course, slashing employee costs is always the easiest way to show significant cuts, and it does send a definite message to investors that Yahoo realizes it must clean up its operations.
“But that’s hacking and we have to be more surgical,” said one exec involved in the process.
But look for more cuts in staff in certain areas, because people are its major cost, such as in Yahoo’s finance, human resources and general and administrative units.
Of course, if its economic situation continues to dim and its stock keeps up its downward slide, Yahoo could move to more dramatic staff cuts, which many feel it should do right away.
One note: If Yahoo manages to successfully complete its merger talks with Time Warner (TWX) over its AOL unit before the December cost-cutting moves go into effect, the company could hold off all cuts until the pair figure out their integration plans.
And then, I would expect, the really large-scale layoffs would begin.