What Will Marissa Do?: As New CEO Unveils Turnaround Plan Today, Can She Avoid Layoffs Later?
One of the looming — but, thus far unspoken — questions about the strategy that Yahoo CEO Marissa Mayer is set to unveil to the Silicon Valley Internet giant’s employees today at 10 am PT is just how many of them are going to be there to push forward the new turnaround plan she’s envisioning.
While it seems unlikely Mayer will mention this unhappy prospect in today’s all-hands meetings with staff, it’s an issue she will nonetheless eventually have to address.
But, despite promising today’s talk would be an “act of radical transparency,” I am guessing any employee-cutting plans Mayer has will remain decidedly opaque for now.
Still, it’s no secret that most analysts and Internet-savvy observers agree that Mayer must make significant cuts in staff in order to move forward, perhaps well beyond the ones that have been made by her predecessors.
And while every single recent Yahoo exec has done layoffs, usually of several thousand, many investors are watching to see if Mayer will make deeper and more company-changing ones.
“Yahoo probably needs to be cut in half,” said one person close to the company, who has told Mayer this. “But no one has had the guts or stomach to do it yet.”
According to Yahoo’s last quarterly report, it had 12,500 staffers, although that underestimates the number since there are also several thousand contractors that the company employs on top of that.
Many think that’s way too many, given the downward growth at Yahoo over recent years and the need to shed non-performing businesses.
One way that previous leaders, including ousted CEO Scott Thompson and interim CEO Ross Levinsohn, had considered cutting staff in a major way was to outsource its advertising tech and search businesses.
But that does not seem to be Mayer’s plan — she’s indicated internally that she wants to invest in both, which will require more staff and lots of money.
Still, there are plenty of areas to aim at, including Yahoo’s outsized number of staffers in general and administrative areas, as well as a number of operating units that have little traction.
The strategy around how to right-size the company will fall to newly installed HR head Jackie Reses, who came to Yahoo with a background in private equity.
(I’ll be writing more about Reses and her unusual role at Yahoo soon — Mayer has also put her in charge of business and corporate development. But, suffice it to say, PE execs know a lot about cutting costs.)
As I said, I’d be surprised if Mayer sullies her presentation about the gleaming future of Yahoo today with the ugly realities of inevitable layoffs. But that does not mean that such choices will go away.
While we await Mayer’s plan to be handed down, let’s recap my recent series of posts on the future of Yahoo under Mayer, who has been on the job for two months now.
Here’s the highlights:
- Mayer is zeroing in on improving Yahoo’s search business and advertising platforms. Efforts include reworking Yahoo’s troubled search deal with Microsoft and possible ad tech acquisitions and also investments.
- Besides all the cultural changes she has made — free food! — Mayer is also, according to an internal memo I obtained, planning on holding the company to strict annual benchmarks of performance.
- She is also initiating a series of product changes, including a major redesign of the home page to make it more of a platform, as well as an email refresh. Mayer is also focusing in on 10 key verticals, such as the powerful Yahoo Finance, and is likely to address the importance of mobile for Yahoo.
- Lastly, she has sicced her top lawyer on leaks, even as she has instituted a policy of minimal interaction with the media. To be fair, there’s little to say about Yahoo right now, so it makes sense on some levels; on others, it’s hard to imagine the riveting story at a public company can avoid press scrutiny.
Whatev! Whatever Mayer does, we’ll do our best to get you even more deets of her strategic vision for Yahoo as it is unveiled.
(Photo courtesy of Yahoo’s Flickr.)