In a move that AllThingsD had previously reported was coming, Yahoo said it had laid off 2,000 employees, or 14 percent of the workforce.

“Today’s actions are an important next step toward a bold, new Yahoo! — smaller, nimbler, more profitable and better equipped to innovate as fast as our customers and our industry require,” said Yahoo CEO Scott Thompson in a statement. “Unfortunately, reaching that goal requires the tough decision to eliminate positions.”

While Yahoo has had periodic layoffs over the years, this one is its most significant in its history, and will also result in another large-scale restructuring of the management organization. More cuts are also likely to follow in the months ahead, due to the reshaping of Yahoo.

The latest employee action is being pushed by Thompson, who joined the Silicon Valley Internet giant in January from eBay’s PayPal unit.

“Change is never easy,” he wrote in an internal email to Yahoo employees (it is below in its entirety), in a well-worn cliché I am dead certain few appreciated hearing today from the top leader.

At an internal meeting with top staff last night, Thompson — who has gotten what seems to be a well-deserved reputation for chewing folks out at Yahoo — was more direct with the execs gathered, berating them extensively for not delivering and getting the company to this sorry point.

Ouch, Scott! It’s Easter, so it might be time for some forgiveness. (And no more ranting about my reporting to those inside Yahoo, since I have been 100 percent accurate so far. FYI, will aim for 110 percent next week!)

Yahoo said it will save about $375 million with the cuts, incurring a $125 to $145 million pretax cash charge for employee severance in its second quarter. Before the cuts, Yahoo had 14,000 staffers and has many thousands more hired as contractors.

The layoffs touch all units of the company, but the hardest hit is the product division, which is headed by Blake Irving, as well as its marketing, research and international units. Yahoo gave no details on the layoffs other than the number.

But the fate of two key parts of the soon-to-be-blown-apart unit — Yahoo’s advertising technology businesses, Right Media and APT, and its search business — is still being contemplated, as I have previously reported. Possible scenarios include a sale or a joint venture transaction for both, which employ thousands of Yahoo staffers.

The layoffs tomorrow are not the end of the road in cutting costs. Along with the likely shedding of its ad tech and search businesses, Yahoo leadership is also looking at future cuts as it evaluates current businesses, which could lop even more employees off its roster.

That said, Yahoo will be doubling down in some older and new arenas, so there would also be simultaneous hiring in the months ahead.

As wrenching as they will be today at Yahoo, the layoffs come as no surprise. Thompson had told employees in memos and also in recent meetings that “real change” was coming to the company.

Along with the trauma of the layoffs, Yahoo is also facing two other tense face-offs externally. In one, activist shareholder Third Point is waging a proxy fight for board seats and stepped up the public pressure this week; and Facebook struck back hard at Yahoo’s patent lawsuit with a counterclaim of its own.

After the layoffs tomorrow, sources say Yahoo will be announcing a new organization by next week. Thompson, along with outside consultants he has hired from the Boston Consulting Group, are making what appear to be profound changes.

Sources said that Yahoo will most likely be comprised of a global media division, one that encompasses Yahoo’s consumer products businesses and one focused on global and regional sales. There could also be a small organization of about 50 employees aimed at future innovation.

Americas head Ross Levinsohn is pegged to run the media arm, which will also include its leads/commerce businesses, such as autos; Shashi Seth — who now heads search and marketplaces — is likely to run consumer products, which will include Yahoo’s communications and search businesses.

Yahoo has already been conducting a search for a new worldwide sales head, who will also be boss of the U.S., Asia and Europe, Middle East and Africa sales regions. Rich Riley, who was recently running EMEA, is reportedly the pick for U.S. sales; Rose Tsou, who is running Asia, would presumably stay put; Yahoo is looking for an EMEA sales lead.

Some current operational execs — such as service engineering and ops head David Dibble, CFO Tim Morse, and top lawyer Mike Callahan — are likely to continue to operate as before.

One big question mark is how Chief Product Officer Irving fits in the possible new org, in which the new units get control of their product development. Irving has reportedly had several incoming job offers, although it is not clear if he has responded to that interest.

But today, the focus is on the layoffs and letting go all those employees, many of whom have worked at Yahoo for years. Even if it will result in a stronger Yahoo, as Thompson promises, it is still a very sad day in Sunnyvale.

Here is a video on the topic that I did with the WSJ.com “Digits” show today, after the cuts were announced early this morning:

Here’s the entire terse statement from Yahoo:

Yahoo! Statement

SUNNYVALE, Calif. — (BUSINESS WIRE) — Yahoo! today confirmed that it is taking important next steps to reshape the company for the future.

“Today’s actions are an important next step toward a bold, new Yahoo! — smaller, nimbler, more profitable and better equipped to innovate as fast as our customers and our industry require. We are intensifying our efforts on our core businesses and redeploying resources to our most urgent priorities. Our goal is to get back to our core purpose — putting our users and advertisers first — and we are moving aggressively to achieve that goal,” said Scott Thompson, CEO of Yahoo!. “Unfortunately, reaching that goal requires the tough decision to eliminate positions. We deeply value our people and all they’ve contributed to Yahoo!.”

Yahoo! has a solid foundation — nearly 700 million users and thousands of advertisers that engage with Yahoo! properties regularly and trust the company with their data and their business. Through its restructuring efforts, Yahoo! intends to grow by responding more quickly to customer needs and competing more effectively in areas where it can win. Yahoo! has identified key parts of the business — a select group of core businesses, the platforms that support those core businesses, and the data that drives deep personalization for users and ROI for advertisers — where the company will intensify efforts and redeploy resources globally, all focused on increasing shareholder value. With a clear focus on profitability and growth, the company will be disciplined in its investments and radically simplify how it builds, launches and maintains many of its properties and products.

Today, the company will begin the process of informing employees about these changes. As part of that effort, approximately 2,000 people will be notified of job elimination or phased transition.

Yahoo! expects to realize approximately $375 million of annualized savings upon completion of all employee transitions. The company currently expects to recognize the majority of an estimated $125 to $145 million pretax cash charge relating to employee severance in its second quarter financial results. The company may incur additional charges in connection with this action. More information will be provided about Yahoo!’s future direction in conjunction with the release of its first quarter financial results on April 17, 2012.

And here is Thompson’s memo to employees, stating the obvious and with nothing new from previous statements and internal memos:

Yahoos –-

Today we are restructuring Yahoo! to give ourselves the opportunity to compete and win in our core business. The changes we’re announcing today will put our customers first, allow us to move fast, and to get stuff done. The outcome of these changes will be a smaller, nimbler, more profitable Yahoo! better equipped to innovate as fast as our customers and our industry require.

Over the last 60 days, we’ve fundamentally re-thought every part of our business and we will continue to actively consider all options that allow Yahoo! to put maximum effort where we can succeed. As part of this process, I believe we have to focus to win in a select group of core businesses globally:

Core Media and Communications: Our content, media, and communications experiences must be best in class. That includes getting today’s core properties right and innovating on a next generation of great product experiences across all screens.∙

Platforms: We must make our core platforms and systems a genuine strength for Yahoo! — platforms that we can really leverage to support our massive scale, drive the deepest personalization, and boost speed to market.∙

Data: Our massive data sets must become a genuine competitive advantage for Yahoo!. We have to unlock the value in our data to allow us to really understand our 700 million users, encourage and win their engagement and trust, leverage everything they do with us to more fully personalize their experiences, and to give our advertisers the immediate insights they are rightfully demanding.

We are intensifying our efforts on our core businesses and redeploying resources to our most urgent priorities. Our goal is to get back to our core purpose — putting our users and advertisers first -– and we are moving aggressively to achieve that goal.

Unfortunately, reaching that goal requires the tough decision to eliminate jobs, which means losing colleagues and parting with friends. Today, we will begin the process of informing employees about these changes. As part of that effort, approximately 2,000 people will be notified of job elimination or a phased transition. We value our people and for those who will be leaving, we thank you for all you have contributed to Yahoo!. We will treat all of our people with dignity and respect, providing resources to help manage through their transition.

Change is never easy. But the time has come to move Yahoo! forward aggressively with increased focus and accountability. Our values have always been about treating all Yahoos with dignity and respect, and today is a day to embrace those values. This is an amazing company with exceptionally talented people and I know we will all do our best to encourage each other through this difficult period of transition.

Scott

According to sources close to the situation, Yahoo’s massive round of layoffs — which is likely to impact up to 2,000 employees — is just the tip of the proverbial iceberg that will hit the storied Silicon Valley Internet giant in the months to come.

Sources said Yahoo is currently planning to announce the cuts in staff in the early morning, just as the markets open. That could change, of course, but the cuts will definitely occur within the next two days.

The layoffs, which will touch all units of the company, are expected to hit hardest in the product division, which is headed by Blake Irving.

But the fate of two key parts of the soon-to-be-blown-apart unit — Yahoo’s advertising technology businesses, Right Media and APT, and its search business — is still being contemplated, as I have previously reported. Possible scenarios include a sale or a joint venture transaction for both, which employ thousands of Yahoo staffers.

Also set to be hard hit are Yahoo’s local businesses, as well as its marketing and research divisions. While still sustaining losses, its media units will not be as badly impacted. And it’s not clear how many employee terminations will be aimed at the company’s general and administrative staff.

The layoffs tomorrow are not the end of the road in cutting costs. Along with the likely shedding of its ad tech and search businesses, Yahoo leadership is also looking at future cuts as it evaluates current businesses, which could lop even more employees off its roster.

That said, Yahoo will be “doubling down” in some older and new arenas, so there would also be simultaneous hiring in the months ahead.

But not tomorrow, which will be one of the tougher days in Yahoo’s long history of periodic layoffs. Newly installed CEO Scott Thompson had told employees in memos and also in recent meetings that “real change” was coming to the company.

That is indeed the case, which is causing massive strain throughout the company, which now employs over 14,000 and has many thousands more hired as contractors.

Along with the trauma of the layoffs, Yahoo is also facing two other tense face-offs externally. In one, activist shareholder Third Point is waging a proxy fight for board seats and stepped up the public pressure this week; and Facebook struck back hard at Yahoo’s patent lawsuit with a counter-claim of its own.

After the layoffs tomorrow, sources say Yahoo will be announcing a new organization by next week, which will create several major, soup-to-nuts units at the company. Thompson, along with consultants he has hired from the Boston Consulting Group, are making what appear to be profound changes.

Sources said Yahoo will most likely be comprised of a global media division, one that encompasses Yahoo’s consumer products businesses and one focused on global and regional sales. There could also be a small organization of about 50 employees aimed at future innovation.

Americas head Ross Levinsohn is pegged to run the media arm, which will also include its leads/commerce businesses, such as autos; Shashi Seth — who now heads search and marketplaces — is likely to run consumer products, which will include Yahoo’s communications and search businesses.

Yahoo has already been conducting a search for a new worldwide sales head, who will also be boss of the U.S., Asia and Europe, Middle East and Africa sales regions. Rich Riley, who was recently running EMEA, is reportedly the pick for U.S. sales; Rose Tsou, who is running Asia, would presumably stay put; Yahoo is looking for an EMEA sales lead.

Some current operational execs — such as service engineering and ops head David Dibble, CFO Tim Morse, and top lawyer Mike Callahan — are likely to continue to operate as before.

One big question mark is how Chief Product Officer Irving fits in the possible new org, in which the new units get control of their product development. Irving has reportedly had several incoming job offers, although it is not clear if he has responded to that interest.

Let’s hope that Yahoos who will be let go tomorrow find themselves with many new employment choices after the ax falls.

In an effort to minimize the impact of massive layoffs that Yahoo’s top management has been planning, according to sources close to the situation, one of the latest ideas to save costs and presumably jobs by new CEO Scott Thompson is to sell off much of its advertising technology platform, including Right Media.

And among the possible buyers Thompson has been targeting in recent visits: Google and Microsoft, as well as Silver Lake, the private equity firm that had once been talking to the Silicon Valley Internet giant about making a large investment in the company.

(That particular deal has gone south, but there is always yet another scheme on the horizon at Yahoo!)

The concept behind such a sale, according to several sources inside and outside the company, is to turn a cost center into a revenue source, with Yahoo essentially outsourcing a business that was a cornerstone of its strategy. A negotiable number of employees affiliated with those units would then move over to the new owner.

The most ideal plan, said sources, would be to sell Yahoo’s whole advertising technology “stack,” including the Right Media Exchange, a marketplace for advertisers, publishers and ad networks to trade online ads. Yahoo bought it for $700 million in 2007.

According to info on the company’s site, it has “300,000 active global buyers and sellers and more than 11 billion daily transactions.”

Also part of the possible package is APT, a system Yahoo has built to make buying and selling online advertising easier. In addition, Yahoo’s technologies for display-ad serving have been mentioned as a possibility for sale.

It’s unclear what the potential sale means for the new ad strategy that U.S. boss Ross Levinsohn and his lieutenant Jim Heckman have been pursuing since last summer. That plan included its own acquisition of ad network Interclick and an attempt to sync up with rivals AOL and Microsoft in an effort to fend off Google and some third-party players, like ad networks.

But the reason for contemplating much a major move — which has been considered before, but never has been seriously offered — are obvious: While Yahoo once dominated this arena, it has steadily lost ground, especially to Google. The search giant has made almost all of its money in search-related ads, but has been moving aggressively via its DoubleClick and other ad-serving entities into higher-level ads.

Microsoft has also been trying to compete, as has AOL, but it’s getting to be an expensive race, and one where Yahoo would have to make major investments to once again gain momentum. Building up this business again had been the aim of co-founder Jerry Yang, who wanted to go big in the arena in a number of ways before he left the company earlier this year.

But those days seem to be over at Yahoo.

“A lot of what has happened so far under Scott [Thompson] has been trying to find more revenue anywhere it can be generated, and get out of businesses that are not growing,” said one person. “Right now, it’s a lot about what we shouldn’t do rather than what we should.”

That has meant visits to see both Google and Microsoft about possible deals by Thompson, with the involvement of CFO Tim Morse and Chief Product Officer Blake Irving.

Thompson (pictured here) has also recently been talking to Silver Lake about the ad-platform sale, in a deal that might include the Andreessen Horowitz venture fund. This would be a different kind of transaction, said sources, in which a separate company would be formed, with Yahoo owning a piece and contracting with the new entity to provide ad technology.

All this activity is related to the layoffs in the works of perhaps thousands of employees, which were to have been communicated to the company this week.

Sources said those have been delayed for some weeks for several reasons, including whether to consider more deeply if certain larger business units can be spun off, sold or somehow transformed. (To be clear: Major layoffs are still being planned, but now might take place in two parts, said sources, in what is a quickly changing and volatile atmosphere at Yahoo.)

Another area being looked at, said sources, is Yahoo’s search advertising partnership with Microsoft, which has not been as successful as had been expected. While Yahoo has been working with the software giant about improving the results, Thompson has apparently been contemplating other possibilities, including working with Google (calling all regulators!) and/or laying off up to 900 employees who work on the company’s search offering.

Any of these moves could, of course, cause a firestorm of controversy, which Thompson appears to not worry much about. He was the driving force in Yahoo’s patent lawsuit against Facebook earlier this week, which is largely attracting a negative reaction across the tech landscape.

A number of prominent voices have spoken out against the legal action, including well-known VC Fred Wilson, who yesterday penned a poisonous blog post, titled “Yahoo Crosses the Line.”

It ends thusly: “I am not writing this in defense of Facebook. They can and will defend themselves. I am writing this in outrage at Yahoo! I used to care about that company for some reason. No more. They are dead to me. Dead and gone. I hate them now.”

Ouch!

Also weighing in publicly via Twitter was former Yahoo director Eric Hippeau, who was one of the company’s first investors, which is embedded below:

Pathetic and heartbreaking last stand for Yahoo bit.ly/yirCcj It’s all over. I loved you very much.

— Eric Hippeau (@erichippeau) March 13, 2012

Double ouch!

All I can say is that Thompson certainly has a lot of gumption. That has actually been his M.O. from the start, said several sources, with the former president of eBay’s PayPal payments unit and dark horse cold-emailing his way into the Yahoo CEO job.

True story: He had not been among its list of possible candidates — largely because he had been placed in his job at eBay many moons ago by Heidrick & Struggles, which was conducting the Yahoo CEO search, and that’s a talent acquisition no-no to poach someone you placed.

That did not stop Thompson, who thought he might be good for the job and reached out directly to board members at the end of the selection effort, which then led to the search committee and soon enough to the job in what was a very quick vetting and secretive (although not secretive enough!) hiring process.

Since then, Thompson has been on a tear, from working on a restructuring to trying to assuage activist shareholder Dan Loeb to helping put the kibosh on its Asian stake sale talks to suing Facebook. And now this sale effort, too.

If the peripatetic Thompson — who might need a dose of Ritalin before this thing is over — wanted to get noticed by the tech powers that be: Mission accomplished!

“He’s definitely someone who appears to have decided on shooting the moon with a lot of these actions,” said one person close to the situation, referring to the move in the card game of Hearts, which is a risky gambit to capture every penalty card worth 26 points in order to win. “I just hope no one loses an eye in the process.”

(That would be triple ouch, by the way.)

No comments all around, but everyone was certainly cordial on this rainy morning.

Yahoo celebrated its 17th birthday last Friday and — in spite of some seriously troubling changes going on at the Silicon Valley Internet giant — the fantastic employees got together for a flash mob of dancing.

Set to a number of songs, including the catchy “Jai Ho!” from “Slumdog Millionaire,” a group took over the URL’s Cafe on the main campus in Sunnyvale and let it fly.

(Thanks to Yahoo Chief Product Officer Blake Irving for the tip on the video via Twitter.)

It was Yahoo legal head Mike Callahan who had the thankless task yesterday of calling Facebook’s general counsel Ted Ullyot to tell him the Silicon Valley Internet giant was intent on pursuing patent lawsuits against the social networking giant.

The charge was being led by Callahan, as well as Chief Product Officer Blake Irving and, especially, Yahoo’s new CEO Scott Thompson.

Much of Yahoo’s senior leadership had no idea of the impending move until Callahan informed them it was about to happen at meeting Monday.

Facebook had known of the patent concerns of Yahoo for some months — the issue had also gotten some coverage in the media — but had not engaged formally on the topic, several sources said.

So, the suddenly aggressive call also apparently blindsided Facebook, even though it had been aware of the possibility of such an outcome.

Thus, it had little time to respond, since Yahoo was also simultaneously briefing the New York Times, according to numerous sources at both companies, and then released an astonishing statement to the newspaper:

“Yahoo has a responsibility to its shareholders, employees and other stakeholders to protect its intellectual property. We must insist that Facebook either enter into a licensing agreement or we will be compelled to move forward unilaterally to protect our rights.”

Apparently, Yahoo’s new motto: If you can’t beat ‘em — and it can’t — sue ‘em.

That would be Yahoo — the perpetual 98-pound weakling of the Internet these days — threatening powerful Facebook, which had cleanly bested it by attracting hordes of users with a plethora of popular products and services.

Yahoo has already lost its audience to Facebook, which was most recently followed by its frittering away a commanding lead in display advertising, too.

That would also be the Yahoo whose most recent success in improving its increasingly tenuous connections with customers was, in fact, by deeply integrating Facebook’s social hooks into its Web properties.

That would be the Yahoo which has failed time and again to innovate its own offerings so drastically over the years that it has now apparently decided that its first and best strategic move under Thompson’s rule is a shakedown.

Such a cynical move on rights Yahoo has long held seems more a play for the cheap seats of Wall Street, given that the company needs to look like it is doing everything it can to turn things around right now as it faces a proxy challenge.

First, it ended difficult talks with its Asian partners, Alibaba Group and SoftBank, over selling back lucrative stakes there.

Now, according to sources, Yahoo’s Thompson has actually been trying to make very nice with activist shareholder Daniel Loeb of Third Point — on-the-down-low chitchats that might have played a part of this latest unusual move.

At least Kodak had a good excuse. The once iconic camera company had recently been trying to take advantage of its trove of patents as a way to stave off declaring bankruptcy.

That didn’t work for Kodak, and it will also not work for Yahoo, whose only real option is to try to innovate its way out of the mess it has landed itself in.

You know, with good ideas.

Instead, the company’s leadership has opted for a road that could rain down trouble and paint Yahoo as a company bereft of talent to win any other way.

And while a range of intellectual property lawsuits have broken out all over the digital sector, involving Apple, Microsoft, Google and many others, such a strategy for Yahoo could be dangerous if it fails in its legal effort to take advantage of its 1,000-plus patents, including those related to search and advertising.

Others — including such tech luminaries as LinkedIn’s Reid Hoffman, who co-owns the seminal Six Degrees patent for constructing a networking database and system — hold a number of critical social networking patents, too, so who knows where this thing will go.

Nonetheless, Yahoo has decided to emulate those companies with one of the few valuable assets it might have, waging its little war, right as Facebook is in the midst of its initial public offering period.

Yahoo has done this before, of course, having wrangled with Google until right before it went public in 2004 over search patents from its Overture acquisition. The pair settled 10 days before the Google IPO, with Yahoo getting several million more shares of that stock (which it then, of course, sold too soon).

That certainly could happen here, with Yahoo managing to grab a chunk of Facebook’s pre-IPO stock.

That would mean that Yahoo’s most valuable asset would be those shares, as well as its stake in Asian companies it bought a while back for a bargain and now makes up a bulk of the company’s valuation.

As to Yahoo’s core business — investors consider it almost entirely worthless.

And let’s not forget: Facebook could also sue right back, which it very well might do. Or, perhaps, cut off agreeable ties that have aided Yahoo in recent years.

In other words, in poking Facebook, Yahoo might now learn what it is really like to be de-friended.

Yahoo’s massive product unit is readying a major reorganization, which will include a new structure, a move that is being spearheaded by its Chief Product Officer, Blake Irving.

But the ground under Irving, as well as several of the Silicon Valley Internet giant’s top execs, is about to get shakier too, due to a wide range of changes now being plotted by newly installed CEO Scott Thompson.

While still in the early stages of formulation, sources said Thompson has been mulling bringing in a head of global advertising sales or revenue chief, as well as more top product execs, as he moves to initiate a plan to shake up Yahoo and also put his own stamp on the company.

Layoffs and possible wholesale abandonment of certain businesses Yahoo is currently in are likely to be parts of this larger plan.

Confused yet? So am I, but let’s sort through all the latest activity.

First, there’s the Yahoo product redo, which has been in the making for a while, well before Thompson arrived last month.

Under the new plan, which is described as “an evolution rather than blowing up the place,” Yahoo’s famously matrixed product unit could be split into three distinct areas: Monetization, which is expected to be headed by longtime exec Mark Morrissey; platform, with cloud dude Jay Rossiter in charge; and consumer-facing products, possibly in the hands of search kingpin Shashi Seth.

The idea behind the latest setup, presumably, is to spur innovation and make it easier for Yahoo to spit out products more quickly. Its recent Livestand tablet app, for example, was late to the game and continues to struggle to gain any real ground, said sources.

Overall, Yahoo still continues to lag behind other Internet rivals in a number of product arenas, for reasons that Thompson is delving into.

The way products are made got a long look-see this past week, in a day-long meeting that Thompson had with Yahoo’s top team execs. Thompson reportedly quizzed the group on its plans, and pressed it to look less at short-term features and maintenance than on finding the next great thing.

“I think it’s fair to say that Scott is wondering why Yahoo did not come up with innovations like Pinterest and Instagram,” said one person about hot new start-ups that are in the sweet spot of Yahoo’s business. “Or, at the very least, why it did not even try to buy them.”

That’s why Thompson, with the help of board members, including David Kenny, has been on the hunt for new talent for Yahoo. That includes a search that is on for a new head of marketing, too.

Thompson has been doing the same kind of assessment with Yahoo’s media and advertising execs, who include Americas head Ross Levinsohn, as well as Asia’s Rose Tsou, and Rich Riley, who heads its efforts in Europe, Africa and the Middle East.

Sources said he believes that Yahoo might need a head of global sales or a chief of revenue to better organize and align its key advertising business. Ad revenues now make up a bulk of Yahoo’s business.

As Thompson has said numerous times publicly since he came on board, he is seeking to diversify that revenue, focusing on new businesses and also goosing non-ad ones already performing well. In Asia, for example, Yahoo has a robust online commerce business in comparison to other regions.

“Yahoo has to slim down and focus in some ways and bulk up in others,” said another source.

Of course, all of this might be moot, depending on how activist shareholder Daniel Loeb, who is prepping his own frontal attack on making changes at Yahoo, decides to move. According to sources, Loeb is assembling his own slate and trying to garner support from other shareholders, in hopes of further improving the value of his more than five percent stake.

What form that will take is unclear, but it’s not completely friendly at the moment.

In addition, Yahoo execs and its board are trying to wrap up a deal to sell off parts of its Asian assets in Alibaba Group and Yahoo Japan, part of a massive arrangement that could bring many billions of dollars of assets and cash into the core company that is left.

Which could then make Yahoo more able to compete, and give Thompson a war chest to do so — or make it an even tastier treat for a wide range of outside investors looking for a deal.

Like I said: Confused yet?

A Yahoo spokeswoman declined to comment.

For someone who is still mulling things over about what to do about his more than five percent investment in Yahoo, hedge fund investor and activist shareholder Daniel Loeb has been very busy lately getting his arsenal ready.

While deciding whether to mount a proxy fight — a potentially nasty public fight with the Silicon Valley Internet giant that sources said could start much earlier than the expected February 24 filing date to make a board challenge — he’s also had at least one phone meeting with new Yahoo CEO Scott Thompson in the last week to talk about the company’s future.

Sources said the talk was cordial, although the pair were not yet discussing any kind of rapprochement, which presumably could lead to board seats for Loeb.

But how far Loeb will go and how far Yahoo will give are the big open questions that are about to be answered.

The earliest nominations for directors by outsiders like Loeb can be submitted is February 24. He then has a month after that to propose a competing slate.

Starting last fall when he started accumulating Yahoo shares, Loeb had aggressively called for the ouster of Yahoo’s Chairman Roy Bostock and director and co-founder Jerry Yang. Yang stepped away from Yahoo earlier this month and Bostock just announced his upcoming departure this week.

Despite the renewed communication with Yahoo, Loeb is still acting like he might opt to fight — or at least freak out Yahoo enough to cooperate.

Among his recent activities, according to many sources:

* Attempting to assemble an alternate slate of directors — including trying to persuade high-profile entrepreneurs such as David Goldberg and Max Levchin to join his board. Loeb has been to Silicon Valley several times to stir that pot.

* Meeting with a spate of powerful tech execs, here and elsewhere, in order to gain support for his battle and search for his own preferred leaders for Yahoo. A favorite is Hulu CEO Jason Kilar.

* Working on hiring a top outside crisis communications firm to handle the expected onslaught of media mudslinging that is sure to take place.

* Buttonholing large Yahoo investors to join him and getting, sources said, more support than expected from bigger ones. That’s no surprise: Capital Research Global Investors and Capital World Investors, Yahoo’s biggest institutional shareholders, voted against the company’s board in its last proxy battle and has been much disgruntled with the latest Yahoo stumbles.

* Recently reaching out to top Yahoo execs, including both Yahoo’s Chief Product Officer Blake Irving and Americas head Ross Levinsohn. Irving was so spooked by Loeb’s hello-there, several sources said, that he sent an email to Yahoo’s top staff about the contact attempt, noting he did not return the call (teacher’s pet alert!).

These are, of course, classic activist tactics by Loeb, aimed at getting the changes he wants made at Yahoo by applying real and perceived pressure.

Loeb had previously criticized the company’s talks with private equity investors, saying the prices being discussed were too low, which helped scuttle those talks.

Yahoo has also tried to gird itself and to assuage other shareholders and the media, as it can hardly stand what a proxy fight will do to its already battered image.

Some recent moves to look like it is on the move include: Loudly negotiating with its Asian partners for a big payday; making significant board changes; and hiring Thompson. Next up, as I previously reported, a large-scale restructuring and the inevitable cost-saving layoffs.

Who wins — and who blinks — in this Loeb versus Yahoo face-off, though, is still to be determined.

While wandering around Yahoo’s campus in Sunnyvale, Calif. — where I had several fingers pointed at me, although it’s not polite to do so — for its annual Product Runway event last week, I got to spend a few minutes with its Chief Product Officer Blake Irving.

Irving, as you will see here, remains an upbeat and even jaunty figure at the troubled Silicon Valley Internet giant — even though his job has been made a quantum level more difficult by the swirl around the possible sale of Yahoo and its leadership morass.

Add to that major attrition and morale issues, especially in its product engineering staff, at the very same time Yahoo needs to prove that it can launch innovative products to keep up with the Googles, Facebooks and others.

That’s Irving’s thankless job, which was why he was touting a number of products last week, including Yahoo’s Livestand news reader that was finally released to the public.

Here he is talking about that and more in an interview with me, including the fact that he will not be bidding for Yahoo (I had to ask!):

]]> http://allthingsd.com/20111107/a-few-questions-for-yahoo-product-dude-blake-irving-who-thankfully-does-not-want-to-make-a-bid-video/feed/ 0 http://allthingsd.com/20111102/liveblogging-yahoos-product-runway-are-you-in-or-out/ http://allthingsd.com/20111102/liveblogging-yahoos-product-runway-are-you-in-or-out/#comments Wed, 02 Nov 2011 17:41:24 +0000 Kara Swisher http://allthingsd.com/?p=139502

I am here at Yahoo HQ in Sunnyvale, Calif., to check out “Product Runway,” which is the Silicon Valley Internet giant’s attempt to show that it can still innovate.

First and foremost is the launch of Livestand, a personalized news reader that is similar to Flipboard and a variety of other rivals, including — soon — Google.

It’s Yahoo’s attempt to present a business-as-usual feel — amidst a long and agonizing and very public strategic overview that might also include the sale of the company (or not!), in the wake of the recent firing of its last CEO, Carol Bartz.

It has caused a lot of trauma inside Yahoo, which can’t help with innovation.

But we press on!

In other words, despite the three-ring circus going on outside, Yahoo wants you to know it is still hard at work.

We begin:

10:35 am: As the strains of U2 die out, Yahoo Chief Product Officer Blake Irving takes the stage, which is actually set up in the company’s cafeteria. I can smell lunch being made nearby and I am hungry.

Apt — Yahoo certainly needs to show off a lot of cool stuff or its fate will be cooked.

No pressure, Blake!

“Personally, I am more bullish on Yahoo today,” he said. “What is Yahoo? Simple. It’s the premier digital media company. Period. Stop.”

Oh, if it were only that easy.

10:46 am: Irving pulls out his favorite slide, which looks like a chemistry test. It lists the various elements of the product strategy, with things like personalization, mobile, premium.

Now to Livestand, which is available on the Apple iTunes app store right now.

Don’t all rush at once!

Irving notes that Livestand is more than just an app — it is a platform.

In other words, Yahoo wants to help publishers publish online. Kind of a Facebook of content.

If Yahoo can pull it off, that is. (And, of course, unless Facebook decides to do the same.)

10:50 am: Livestand is an HTML5 “personalized living magazine.”

“This is the way Web pages are going to look,” declares Irving. Which is to say, heavy on photos, swoopy navigation, a television screen-like interface.

Irving uses the example of Surfer magazine, which is a good idea since waves always look pretty. Especially in a video-in-frame with Kelly Slater in Hawaii.

But, in essence, for anyone who has used Flipboard for years now, none of this is entirely different.

10:54 am: The look of what would be the Yahoo News page is actually much more interesting, since it is clearly a whole lot better than the Web page.

Irving also shows off a “living ad” — in this case, an unusually snuggly couple on a couch. It is cool, but creepy.

When launched, the ad has tap points. Irving — naughtily declaring about what is an ad, “I’ll tap that” — taps the lady’s butt, which would also have been my move. We learn about the jeans, of course.

10:58 am: Irving then shows off the ability to add feeds.

Next, something called “Cocktails.” First up, a developer tool called Yahoo Mojito and Yahoo Manhattan, which is a hosting service. The company will open-source both the technologies in 2012.

Irving brings up Mike Kerns, VP of Personalization & Social, who came to Yahoo when it bought the innovative sports fan site called Citizen Sports.

“We like to ship sh#t,” he notes. I like Mike Kerns immediately.

Kerns intros C.O.R.E. No, it is not a secret government organization that takes out fussy bloggers, who might be more critical than Yahoo execs would like.

In fact, it stands for “content optimization relevance engine.” Of course it does.

Simply put, C.O.R.E. is trying to link the right content or whatever to the right consumers and who likes what. Ladies like this, dudes like this. Apparently, “men of multiple ages” enjoy stories about golden chicken.

11:11 am: Kerns is moving on to social, especially its integration with Facebook. While much touted, sources tell me it has gone slower than expected in terms of use, but that it is improving.

Kerns talks about the idea of matching content to conversations to interests and, well, you know — the now exhausting world of modern media consumption.

The world in which you can no longer simply read an article and enjoy it — you must comment, share, discuss, parse, tweet.

Does anyone remember when you read something cool and just kept it to yourself?

Forget it, pal! It is a full-information society now and you better get on board and start poking your friends about every little thing.

(Personally, I plan on becoming a hermit in 3 … 2 … 1.)

11:18 am: Now Tim Parsey, who is Yahoo’s design head. He is hands down the most delightful exec the company has had in a while, mostly because he loves to smirk adorkably.

He shows off Yahoo’s first original design, which was a dull list. And then another really bad logo. But Parsey loves it! It’s kitschy!

Smirk attack!

Parsey moves into what has to happen now, which is to deliver a much more emotional experience and a much better designed one. He uses words like “humanism.”

Say what? He is right — Yahoo has for too long completely ignored design as an important part of the experience.

That’s why Flipboard was so quickly touted — it was pretty and fun. And it is why everyone is simply forced to love Apple products.

11:22 am: Parsey even has a code for it, called REM — for rational, emotional and meaningful.

He shows off a weather app. People take photos and they can be used in the app. Then Yahoo Mail for the iPad, whic is also handsome with photos and video. Livestand, also pretty.

“Great way to differentiate,” says Parsey. He calls it “one Yahoo!” Indeed.

11:35 am: I’ll admit it. After Parsey-fest, I zoned out for a sec when IntoNow dude, Adam Cahan, comes up.

Donut emergency!

Back to IntoNow, it’s the television indexing service that Yahoo bought in April.

Essentially, more ways to watch the media — in this case, video — and do 53 other things at the very same time. Memo to humanity: We will all be paying continuous partial attention for the rest of eternity.

Like I said: Hermitage!

11:41 am: Product dude Irving is back, making a point that, despite all the public mishegas, Yahoo has been busy at innovating.

A redo of email, better search, social “Facebar” with Facebook, Flickr for Google Android.

Irving is correct — Yahoo’s engineers have been hard at work and deserve kudos for doing so, even with attrition issues, stock declines and questions about the company’s very future being debated daily.

The problem is that too many of these improvements are mostly incremental and essentially table stakes for tech companies, most of whom have introed many more significant innovations in the same time frame as Yahoo has.

Google did Android, Google+ (as well as some notable failures). Microsoft did Kinect, Windows Phone, Windows 8. Amazon did Kindle Fire. Facebook did a range of major updates, as it has grown like a weed.

And there’s Apple. You might have heard of the iPhone and the iPad.

You get my point. Yahoo’s Product Runway today is well done, but what it really needs to be is just the beginning of a take-off.

11:48 am: Now Q&A time.

The first question is what took so long to get Livestand out, the second is why should people use Livestand since Flipboard and others have already been around for a dog’s age.

I ask about design — mostly because I want Parsey to use the word “delicious” a lot — and also about all the turmoil around the company and its impact on product creation. (I decide not to mention that Yahoo blew its acquisition of the bookmarking site, Delicious, and then sold it.)

Parsey delivers on the delicious scale, noting that Yahoo must have one design experience and yet has a lot of different interfaces. In other words, it cannot be Apple, but it can feel a lot more cohesive.

Irving talks a little bit around the obvious elephant in the room — the future of Yahoo — noting that the product staff was trying to focus and forget the storm going on outside.

“We have dreams about what this company can be,” says Irving.

You and me both, brother.

12:04 pm: More questions that are too detailed for my tastes, since they have delivered lunch and I can see it and I am ravenous.

As Parsey might say: It looks deliiiiiccccious.

Now, let’s hope Yahoo can do even more tasty stuff.

]]> http://allthingsd.com/20111102/liveblogging-yahoos-product-runway-are-you-in-or-out/feed/ 0 http://allthingsd.com/20111028/news-reader-traffic-jam-yahoos-livestand-and-googles-propeller-set-to-launch-aiming-at-flipboard/ http://allthingsd.com/20111028/news-reader-traffic-jam-yahoos-livestand-and-googles-propeller-set-to-launch-aiming-at-flipboard/#comments Fri, 28 Oct 2011 12:35:03 +0000 Kara Swisher http://allthingsd.com/?p=137646

Memo to Flipboard, as well as Pulse, CNN’s Zite and AOL’s Editions: You might want to make some room in the already-crowded news and social reader space, because you’re about to get some bigfoot company.

Next Wednesday, according to sources close to the situation, Yahoo will finally officially unveil its offering, called Livestand.

And perhaps as early as next week or in the weeks soon after, Google will also weigh in with its version of the genre — code-named Propeller — which also might be the product’s name. Another moniker under strong consideration: Currents.

As I have previously reported, Google Propeller is an HTML5 reader for the Apple iPad and Android — essentially a souped-up version of similar apps such as Flipboard, AOL’s Editions, Zite (which was just bought by Time Warner’s CNN) and Pulse.

All these apps are part of the drastically changing habits of media consumers, helping users better navigate numerous social and media feeds — such as Facebook and Twitter, as well as news sites and more — using handsome interfaces and touch technologies on tablet devices.

Flipboard, the most prominent and elegant of these offerings, is now available only on the Apple iPad.

Flipboard’s traction among elite users, along with its high-level design ethos and strong reviews, is why Google tried to buy the well-funded company last year, sources said.

But Flipboard — which is backed by some of tech’s biggest venture players, who have invested more than $60 million at a $200 million valuation — declined the kind offer.

At the time, sources said, Google told Flipboard execs that if it did not buy the start-up, it planned to do a version of its own.

Hence, after I heard about the product earlier this year, I dubbed it the Flipinator.

According to sources, Propeller will launch with a plethora of media partners, as well as integration into the Google+ social network. The aim of the search giant is to offer media companies easy tools for publishing content on these devices, as well as a better path to monetization.

That is essentially the same plan at Yahoo, which has been working on Livestand with hopes of it being a product that will woo publishers into tight collaboration with the Silicon Valley Internet giant.

Livestand was announced by Yahoo’s now-fired CEO Carol Bartz in February, at a speech at the World Mobile Congress in Spain.

At the time, Bartz demoed a magazinelike platform that would allow publishers to put up content easily and give users the ability to personalize their selections based on search history and interests.

Bartz called it “content in context.” (You can see the demo video below.)

But while Bartz promised the product within three months, development has been slowed by its complex technologies, bugs and the need to sign on publishers.

Yahoo’s Chief Product Officer Blake Irving is pushing the product hard as a way for the company to reinvigorate its media products.

It’s not clear how many publishers Yahoo will have at launch, and neither are the distribution plans, beyond flacking it from the Web site and being present in app stores.

Google, on the other hand, has its Android platform to push out Propeller, although it all must work as well on Apple’s iPad, which is the dominant tablet on the market.

But just because both Yahoo and Google are big companies is by no means a guarantee of success — think Yahoo 360 or Google Wave or Buzz — and their lateness might be a hindrance.

And, in fact, other news reader apps are much further along. The leader, Flipboard, has already had four million downloads and 50 partnerships with leading publishers.

It also has started to introduce rich advertising products and, perhaps most importantly, has tight social integration with Twitter and Facebook.

There will be social elements on both Yahoo’s Livestand and Google’s Propeller. But news reading will be stressed more, making them more like Pulse, a tiny but highly innovative start-up.

Each of the existing apps will presumably compete by adding on more features. Pulse recently added cross-platform, cross-device syncing, while Flipboard is close to unveiling an iPhone version it has said it was working on.

Yahoo and Google PR declined comment.

Here is the Livestand demo video from February:

]]> http://allthingsd.com/20111028/news-reader-traffic-jam-yahoos-livestand-and-googles-propeller-set-to-launch-aiming-at-flipboard/feed/ 0 http://allthingsd.com/20111020/what-is-yahoo-still-one-of-lifes-unanswerable-questions/ http://allthingsd.com/20111020/what-is-yahoo-still-one-of-lifes-unanswerable-questions/#comments Thu, 20 Oct 2011 12:30:15 +0000 John Paczkowski http://allthingsd.com/?p=134820 What is Yahoo?

That question has been put to the company’s leadership innumerable times over the past few years, each time with wildly different answers:

At D6 in 2008, Yahoo co-founder and then-CEO Jerry Yang said the company is a consumer starting point on the Web. “We want you to start your day at Yahoo,” he said.

At D7 a year later, Yang’s successor, the recently ousted Carol Bartz, defined the company as something entirely different: “The place where people find relevant contextual information about things they care about.”

And in 2010, when the question was asked of Yahoo EVP Blake Irving, he replied with the most unwieldy, nonsensical answer of all.

“Yahoo is a global series of Web experiences delivered across a variety of devices that gives people what they want,” he said. “It connects advertisers to a global audience. Yahoo is all about delivering experiences to individuals that make them engage with each other. Folks always ask, ‘Is Yahoo a search company? A content company? A communications company?’ In a world where people only have so much time, we’d like to help them engage with the things that matter most to them.”

That’s a pretty lousy elevator pitch.

So when the “What is Yahoo” question was put to Yang once again, at AsiaD today, expectations for a decent answer weren’t particularly high. Good thing, too, because he didn’t exactly raise the bar with his reply.

What is Yahoo? “It’s the premier digital media company,” Yang said.

The premier digital media company? Really? I imagine Apple, Amazon and YouTube might have a thing or two to say about that — even if Yahoo’s video and entertainment offerings in India are as big as Yang claims.

So again, what is Yahoo?

Who knows? But maybe it’s time to stop asking.

]]> http://allthingsd.com/20111020/what-is-yahoo-still-one-of-lifes-unanswerable-questions/feed/ 0 http://allthingsd.com/20111017/exclusive-yahoo-cto-out-but-stays-eir-at-company/ http://allthingsd.com/20111017/exclusive-yahoo-cto-out-but-stays-eir-at-company/#comments Mon, 17 Oct 2011 23:05:58 +0000 Kara Swisher http://allthingsd.com/?p=133066

Yahoo CTO Raymie Stata is stepping down as CTO of the Silicon Valley Internet giant, the company confirmed this afternoon, after I made a query about the change.

He will be replaced by Ash Munshi, Yahoo said.

In a statement, the company said:

“Raymie Stata, CTO, has taken on a newly created role of EIR at Yahoo! to allow him to return to his entrepreneurial roots. Yahoo! is excited to appoint Ash Munshi to the role of CTO. Ash has a well-established career managing successful global technology organizations at the most senior levels with a laser focus on meeting and exceeding customer needs.”

While sources said Stata had planned to leave Yahoo, he will remain an Entrepreneur in Residence there, an unusual arrangement for a big company. Typically, departing execs become EIRs at venture firms.

The latest talent shift at Yahoo is part of a broader attrition problem at the company, which has been persistent for years and has worsened in the wake of the firing of CEO Carol Bartz and a massive strategic review of its options.

Employees at the company have become troubled by the turmoil and are worried about what a possible change of control will bring for Yahoo.

Stata was appointed CTO last June, after having been its Chief Architect. He has reported to Chief Product Officer Blake Irving.

]]> http://allthingsd.com/20111017/exclusive-yahoo-cto-out-but-stays-eir-at-company/feed/ 0