This week in Las Vegas, the new management team running Yahoo — including CEO Marissa Mayer — is at International CES to schmooze with big advertisers and convince them that Yahoo is the place to put large chunks of their marketing budgets.

One of the longtime selling points of the company is the sheer size of its audience, especially for the key money-making parts of the site — the homepage, Yahoo Mail and search.

But private stats from comScore show that those three areas have continued their longtime decline over the last year, in some cases dropping significantly. In November and December, for example, compared to the same two months a year ago, U.S. search was down 28 percent and 24 percent respectively, while mail was down 16 percent and 12 percent.

This matters a great deal, since the troika of homepage, mail and search have been the critical driver of the Yahoo value ecosystem for advertisers.

The impact of those drops is felt all over Yahoo, whose music, movie, games and travel site have also seen massive drop-offs in traffic year over year in those same months.

Stopping the decline is critical for Yahoo, since Mayer herself has underscored the need for size in her pushing for new businesses at Yahoo that are 100 million users in size and/or have revenue prospects of at least $100 million.

While this is a lofty vision, the reality of traffic falloffs on key properties is a vexing issue, especially since they remain its main source of revenue and also an important element in launching future products Mayer is promising will turbocharge the company.

It’s not that Yahoo is not huge, especially compared to most sites on the Web.

As one of the top Internet brands, according to a recent Nielsen report, the average number of total monthly unique visitors for the longtime Silicon Valley Internet company in 2012 was 141.6 million, No. 3 behind Google and Facebook in the U.S. market. Similar rankings were reported by comScore, which placed Yahoo at the No. 2 spot after Google, with 171.4 million monthly visitors in November.

But, for many years, traffic to those important consumer destinations of Yahoo has been on a clear and unstopping decline, statistics (usually from comScore) that the company nonetheless always dutifully puts in its earnings slides — see below — for investors to get some idea of the major and vexing issues facing the company.

That was suddenly ended in the last quarter with the engagement slide removed from Yahoo’s public deck entirely. Not all companies include such stats, so when I inquired as to why the company had made the change, Yahoo PR never returned my phone call.

But it’s not hard to guess the reason for the shift — the numbers were not good and they called more attention to Yahoo’s glaring challenge, which is getting users reengaged with its products by creating what Mayer has dubbed several times “delightful” experiences.

According to numerous sources, that has also been the case within the company too, with the new regime restricting an internal transparency initiative pushed by former Chief Product Officer Blake Irving that shared product performance numbers with the top 100 leaders at Yahoo.

And while it’s an interesting strategic choice, several sources inside the company this week urged me to get ahold of increasingly worrisome numbers from comScore — available to its private clients — comparing November 2011 to November 2012 and also December 2011 to December 2012 at home and work in the U.S.

So I did, getting the same stats from numerous sources — numbers that a spokesman for comScore confirmed were correct.

And, as promised, they are worrisome indeed.

In November 2012, compared to November 2011, the monthly unique visitors to the homepage declined 17 percent to 91.8 million from 110.9 million; Yahoo Mail dropped 16 percent (from 92 million to 77.7 million); and Yahoo search dropped 28 percent (from 93.3 million to 66.9 million).

Also off significantly for all three areas, often by one-third, were a plethora of other stats: Percentage of reach, total minutes, total page views, total visits and more.

One of the only bright spots for Yahoo was the relatively small Flickr sites, which were up 37 percent — 26.7 million versus 19.4 million — in unique monthly visitors year over year. The photo-sharing site — which has been getting a much-needed refresh — was also up in all other stats.

But Flickr — which Mayer (pictured here) has laudably touted and supported after years of inexplicable neglect — is not a money-maker for Yahoo, even if its return does burnish the company’s tech and innovation cred.

In December 2011 to December 2012, the homepage was more stable, gaining four percent in monthly uniques from 109.4 million to 114.2 million, but with other key stats both rising and falling. Total visits were up 14 percent, for example, while average minutes per visit was down 13.6 percent.

But the trouble for mail or search continued, off 12 percent (89.9 million to 78.7 million) and 24 percent (88.7 million to 67.4 million) respectively in monthly uniques, with similarly major declines in all other stats.

Mail recently got a refresh too under Mayer, despite some recent security glitches, so new stats will show if that will help stem the declines. Search is another story all together, with Yahoo in what can only be described as a dysfunctional partnership with Microsoft that numerous sources tell me Mayer is seeking to end.

The homepage, too, is undergoing a redo, with a design that has a decidedly more mobile and social feel, and pushing an ethos of Yahoo becoming a hub for content discovery. It is hoped the new look will boost traffic relatively quickly from its current downward trajectory.

To be fair, there can be lots and lots of reasons for these declines, although most of Yahoo’s competitors are, at worse, seeing a flattening of growth and not outright declines.

And sometimes Internet sites complain that services like comScore undercount, although Yahoo had previously used the firm in its public documents. More to the point, as multiple sources within the company note, the stats are directionally correct in that they closely track with internal Yahoo numbers.

Which is to say, traffic is going down rather than growing. That is clearly why Mayer has loudly stressed mobile since arriving at Yahoo, an area not included in these numbers that many sources said has strong growth to about 70 million monthly unique visitors via its apps and mobile-enabled Web offerings.

But unlike the homepage, mail and search — which push and pull traffic all over Yahoo and are responsible for most of its current monetization — mobile also makes very little money now. And Yahoo — unlike Facebook, which recently did — does not break out mobile results.

So, it will be interesting to see if the company does so when it reports fourth-quarter earnings on January 28 and also if it says anything about continued traffic declines of its traditional Web business in the period and the impact on revenue.

Still, there are lots of ways to counter declining or flat revenues, even with declining traffic — via cost cuts, efficiencies, charging more and selling assets (as Yahoo did in the last quarter). And Yahoo has ably managed to keep its operating margins growing over the years, despite both the declines in traffic and moribund growth in its revenue.

But the real and only fix is the drastic fix to existing tentpoles Yahoo has and the creation or acquisition of products that excite consumers and, therefore, advertisers.

It’s not an easy thing, of course, as well-known venture capitalist Ben Horowitz recently wrote in his blog about the need to focus on products over building and improving culture — one of Mayer’s other big initiatives at Yahoo.

Wrote Horowitz in what I consider one of the clearest articulations of what it takes to win for startups, as well as big companies like Yahoo:

“The primary thing that any technology startup must do is build a product that’s at least 10 times better at doing something than the current prevailing way of doing that thing. Two or three times better will not be good enough to get people to switch to the new thing fast enough or in large enough volume to matter. The second thing that any technology startup must do is to take the market. If it’s possible to do something 10X better, it’s also possible that you won’t be the only company to figure that out. Therefore, you must take the market before somebody else does.”

If you want to take a gander, here are some more of those old Yahoo quarterly engagement slides, which were recently eliminated from its presentations:

(Note: I reached out to Yahoo’s outside PR firm — since they do respond to queries — and also some company execs to get a comment on this story, but so far there has been none.)

Earlier today in trading, shares of Apple briefly dropped below $500 for the first time since February, largely due to more rating cuts by Wall Street analysts.

The stock did manage to rally later, ending up on a slight rise of 1.8 percent to close at $518.83 for the day.

But the worries are increasing about the usually high-flying stock, which is down almost 26 percent over the last three months. (That said, Apple shares are up just above 28 percent for the year to date.)

Still, analysts are fretting, such as Citigroup, which had only recently initiated coverage with a buy rating for Apple at the end of November. Last night, it moved to a neutral rating and slashed the price target for shares from $675 to $575.

The biggest new worry is the sales of Apple’s latest device, with Citi’s Glen Yeung noting that “near-term supply chain order cuts, while inconclusive in nature, bring into question the strength of iPhone 5.”

Citi is one of several downgrades of late for Apple; today’s included dings from Canaccord Genuity and Pacific Crest Securities.

Now, without another product in the immediate pipeline and fears that the company’s competitiveness in the smartphone market is waning, the Cupertino, Calif., company is in the unique position of needing a new “wow” product in the months ahead to spur a rally.

There are some bright spots, though. Apple said it had sold two million iPhone 5’s over the weekend in China and a new Morgan Stanley report is indicating that iPhone and also iPad demand remain high.

But, while there has been swirl around a new take by Apple related to the television, many investors and also fans (see this great essay by Brightcove CEO Jeremy Allaire) are clearly hoping for even more.

Tonight, new Yahoo CEO Marissa Mayer gave her first public interview since becoming the leader of the troubled Silicon Valley Internet giant.

Not to cranky me, of course, but to the much more amenable Fortune magazine writer and editor Pattie Sellers, who hosted the former Google exec at a dinner in Palo Alto, Calif., as part of the magazine’s Most Powerful Women franchise.

Fortune recently put a glamour shot of Mayer on the cover, and Sellers also did a profile. Now, Mayer was ready to sit down to talk about Yahoo and more.

(I wish I could have reported from the event, and almost did. I had initially been invited to the dinner at the Garden Court Hotel for about 100 guests, mostly women. But I was then waitlisted, and then told by Sellers directly that I could not attend, as the editors had decided to close out outside media and only have Fortune staffers covering it.)

Whatever! I have my ways to liveblog it and do it faster than any magazine writer can — and none involve disguising myself as a cater-waiter or solely using the Twitter feed from Fortune. As if!

Here goes:

7:50 pm: After some lovely cocktails, the audience sits down at about 10 tables of nine people and starts in on the salad course.

Soon enough, the night starts off with a speech by a McKinsey partner (and presumable sponsor of the dinner), delivering some stats as part of a study of some sort about how businesses are using — or should be using — social tools.

More than 60 percent of knowledge workers spend time exchanging information … Social can deliver an estimated $1 trillion in value.

Big news! Not! Even! Slightly! Oh dear, please get to the opening act!

Finally, Sellers gives her intro of Mayer.

8:04 pm: Sellers notes that her conference had hosted Yahoo CEO Carol Bartz in 2010 (she was ousted in 2011), and in 2011 had Mayer when she was an exec at Google (she became Yahoo CEO this year).

Now, in 2012, Mayer is top dog at Yahoo, and the youngest CEO in the Fortune 500.

“Why don’t we just call this ‘the most powerful Yahoo dinner,’” jokes Sellers.

Why not!

Mayer — for those who care, and forgive me, since I am fashion-stupid — is wearing a black frock and some heeled Mary Janes. She gets big applause when Sellers notes that Yahoo stock is up 18 percent since Mayer became CEO.

Note: It did go down when she made a shareholder misstep early in her tenure, but has gone up since she repeated mobilemobilemobile with confidence on a recent earnings call that got investors excited about her tenure.

8:08 pm: By the way, Mayer put in a call for people to vote for her as Time magazine’s Person of the Year (she is on the list of nominees — more kudos from a Time Inc. property).

Mayer starts off with basic PR messaging that she trotted out previously on the recent earnings call, around how she wants Yahoo to be focused on “delighting and engaging users” and how it is a brand that touches people every day.

Therefore, its products need to be inspiring and delightful.

Daily delight! This is the buzzword.

Also, she notes, Yahoo should be the bestest place to work.

As apparent proof of that, Mayer says that all Research In Motion BlackBerry smartphones have been banished, and that Yahoos will be using Apple’s iPhones, Google’s Android phones and Microsoft’s Windows phones.

This has been endlessly reported, even though most other Internet companies do this, but it’s a good line, anyway.

8:12 pm: By the way, iPhones are the most popular with Yahoo employees.

News at 11! (I will add that iPhones are the most popular with the Swisher boys, too, and — irony alert — one of their moms works at Google.)

Sellers then asks about what makes a good product, which is precisely why the product-savvy Mayer was brought in to fix Yahoo.

Says Mayer: “Acute user need.”

I acutely need doughnuts. Does this count?

Also, says Mayer, products have to be created in a way that is “frictionless and beautiful,” and that the offering cannot get in the consumer’s way.

Sellers asks her to name a great product. Mayer notes that she was not talking acquisitions, but quickly namechecks the iPhone and Google.

Since those companies’ market caps are a billionty times bigger than Yahoo’s, she def cannot acquire anything there.

8:17 pm: Mayer also apparently likes some kind of luxury paper made in Germany that looks like velvet. It’s Gmund, by the way.

The topic moves on to Flickr, the once hip photo-sharing service that Yahoo bought and proceeded to ignore. Meanwhile, Instagram.

Mayer says that Yahoo needs to focus on the “global suite” services that are excellent, and on executing them well.

She points out Yahoo’s fantasy football service, mentioning its recent breakdown on game day that sent fans into a tizzy.

It’s a they-love-us-so-much-they-hate-us point.

Yahoo will not do things like online maps, though, Mayer says, noting that where Yahoo cannot compete, it should partner.

Sellers asked about acquisitions.

Mayer: Mobilemobilemobile! (It worked before!)

8:22 pm: Mayer then mentions the importance of small teams that work together, such as its recent Stamped purchase.

She notes that the bigger and more strategic opportunities are around advertising technology. Calling the Rubicon Project!

Mayer veers away from a question about layoffs, a sad Yahoo tradition. I have reported previously that she will make cuts via performance reviews.

At Yahoo, she says, it’s now about performance, not potential: “No offense to potential, but what we really care about now is performance.”

No offense taken!

Also, everyone’s goals will be posted on the Yahoo Web site for everyone to see.

Oh, wait, there will surely be offense taken by those lazy potential people at Yahoo.

Mayer does add that Yahoo should be a “growth company,” and not one defined by cuts.

8:28 pm: “The consumer Internet is growing, and we need to invest,” she says.

To achieve this will be a hard job, and will take multiple years, she adds.

Sellers asks about the Disney turnaround, which Mayer is apparently fascinated with. Mayer does indeed love Disney.

Who doesn’t? (Well, me, but I am an outlier.)

Speaking of Disney, one of its directors, Facebook COO Sheryl Sandberg, sent regrets, but has emailed a question from its board meeting in New York.

Sandberg once worked at Google with Mayer, though the pair is still not working on a search engine together.

Sandberg asks what was most surprising to Mayer about taking over at Yahoo.

Mayer says she thought the job would be hard, and her new baby would be fun. Mayer had her first child at the end of September.

“The job is fun, and the baby is easy,” says Mayer.

Sellers wants to know how Mayer gets it all done. The answer: “Ruthlessly prioritize.”

She notes that that’s why she has not talked to the media at all, and why she will not be talking after this event.

(Well, I guess I will go back to not waiting by the phone for Yahoo PR to call back. Hi Anne! — also looking forward to not getting the holiday media party invite, which is no prob as the Googlers are throwing one the same night and they usually have organic arugula picked by elves they employ that’s acutely delicious.)

Then, as a Wisconsin Green Bay Packers fan, Mayer does her version of the famous Vince Lombardi quote: “God. Family. Yahoo.”

Cheesehead moment! And Mayer and I have so much in common! Mine is: Dog. Family. Yahoo.

8:33 pm: Sellers throws in one more question from famed investor Warren Buffett, who apparently wants to know what, if Mayer was not CEO of Yahoo, would she want to run?

Not Berkshire Hathaway! Mayer says she would build something herself.

It seems as if that is what she is doing at Yahoo, so we await the result.

Until then, Mayer’s mum. So to speak.

They like her, they really like her.

Wall Street, that is, in regards to new Yahoo CEO Marissa Mayer, assigning the former Google exec a clear premium.

And whether it is deserved or not yet from a pure performance perspective — we actually won’t know for several quarters ahead — the shares of the Silicon Valley Internet giant over the past three months have gone up 22 percent. The rise has taken place pretty much on the promise that she will finally be the one to deliver what no other Yahoo leader has done.

And that is, besides making the company relevant and innovative again: Getting Yahoo’s stock past $20 a share again.

That’s within striking distance now. Shares are at $18.40 today, close to an all-time high for the year. The recent rise certainly isn’t taking into account the results of the recent lackluster third quarter, which continued to show the worrisome downward trends — even though partial asset sales of the company’s Chinese Alibaba stake successfully masked the problems — in growth, engagement and overall profitability.

But Mayer’s confident I’ve-got-this tones on the earnings call itself — especially in pushing a mobile strategy that has not been put in place as yet in any substantive way — won over Wall Street investors, who apparently like how she sounds and, thus, are intrigued with what she might do.

While this kind of perceptual game will only get Yahoo so far, moving out of the teens in share price would be an important benchmark for the company.

The stock was last at that level in August of 2008. At the time, in fact, $20 a share was considered very disappointing, taking place after Microsoft dropped its $44.6 billion hostile bid for Yahoo a few months earlier. Indeed, $20 was a big comedown from when Yahoo shares were above $43 in 2006.

The lowest price Yahoo shares got in recent years were $9.39 in November of 2008, just before then CEO and co-founder Jerry Yang stepped down.

Now the stock is close to double that sad trough, fueled in part by some cosmetic moves to improve culture by Mayer — including free food, smartphones and a promise to end the slow-moving decision-making at Yahoo.

There has also been a start of the promised multi-billion-dollar stock buybacks by the company, although Yahoo has been cagey about how and when it is purchasing. Also helping, more recently, is that several big hedge funds are buying into the story of hope.

Following in the footsteps of successful activist shareholder Dan Loeb of Third Point, who is now on the board and is a major Yahoo investor, others like him have now joined in the party in a bigger way. That includes David Einhorn of Greenlight Capital and Chase Coleman of Tiger Global Management.

The thoughtful Einhorn, who is a friend of Loeb’s, has been in and out of the stock before, buying it on hopes that now ousted CEO Carol Bartz would be Yahoo’s savior and selling it soon after it was clear she might not be. He came back in February with three million shares, sold them in May, but now has upped his stake to just over five million more under Mayer’s regime.

More substantively, Tiger’s Coleman has grabbed 25 million shares (interestingly, he’s also upped his stakes in Groupon and Facebook).

Obviously, they must believe Yahoo is set to move upward, which all depends on Mayer. She’s made one critical stock misstep early in her tenure, by announcing that she was considering keeping the huge cash windfall from its sale of Alibaba stock and not giving it back to shareholders in some form.

That dropped Yahoo’s shares to under $15, but Mayer walked back that mistake and the stock has been climbing since.

For the year to date, it’s up almost 14 percent — a nice rise — although that pales in comparison to Apple’s 39 percent rise, Amazon’s 37 percent rise and, most of all, AOL’s 136 percent leap.

The comparison to the massive stock run that AOL has had, after CEO Tim Armstrong — also a former Googler — cut costs, focused units, sold patents and bought back stock, is often made. It’s perhaps apt, but arguably Yahoo has much better and fixable assets than AOL.

More to the point, Yahoo’s price-to-earnings ratio remains unusually low — it’s 5.6, compared to the S&P’s 14.2 average — which means that the entire business is severely undervalued by Wall Street.

It is if Mayer can create real value by actually staging the comeback she is already getting credit for accomplishing. She certainly has a lot of levers to improve results, from the stock buyback to finally making a deal to sell its multi-billion-dollar stake in Yahoo! Japan to making expense cuts to buying some innovative small start-ups to creating products that aren’t, well, lame.

Most importantly, Mayer has to stop the decimation of Yahoo’s once mighty advertising business, which makes up the bulk of its revenue, as well as improve its search monetization by rejiggering its heretofore dysfunctional partnership with Microsoft. (But, as I wrote earlier this week, she will not be making new search engines with Facebook.)

A gander at this chart of Yahoo’s declining quarterly revenue should give you a good visual of the problem with the core business:

YHOO Revenue Quarterly data by YCharts

And, indeed, Yahoo’s sales have dropped 29 percent since 2007, with typically flat display revenue and declining search revenue, which was once Yahoo’s crown jewel. While operating margins have risen over the years, very few point to the company as an exciting growth story.

And it still isn’t, although investors are starting to consider it a possibility. We’ll see as Mayer makes more significant changes in 2013, hopefully underpinning the stock’s recent rise with a true story of financial strides.

But, for now, giddy shareholders probably should not get too far ahead of themselves. Not that you can stop them: Mayer fan Eric Jackson is calling for Yahoo’s stock to be over $40 again by end of 2013.

Whether the Mayer premium can do pull off that particular investor miracle or not remains to be seen.

Yahoo CEO Marissa Mayer is now starting to unveil the flip side of free lunches and smartphones, with two employee-focused moves that are a little more tough love in nature.

According to several sources close to the situation, she has officially ended a longtime practice at the Silicon Valley Internet giant of giving most of the company the week off between Christmas and New Year’s.

While many Internet companies slow down in that holiday period and many are much looser about employees taking time off, Yahoo is one of the few that closes down the company, except for essential staff. (LinkedIn also currently offers a rest week to employees.)

Eliminating the rest week is probably a long time in coming and many at the company have long thought it should be eliminated, since it has been paid time off for Yahoo’s 12,000 employees.

“Yahoo has a lot of work to do, so there’s no time to rest,” said one staffer in a common sentiment.

That said, from a financial point of view, the rest week practice does have positive implications for Yahoo. Besides compelling staff to burn off a week of vacation in the current quarter and not carrying over those costs into the new year, there are also cost savings in terms of keeping its facilities going.

No rest week aside, employees are also about to experience an even bigger change soon, as Yahoo’s HR department prepares a new plan to evaluate the efficacy of its staff.

Under Mayer’s plan, sources said, there will be new measurements of performance instituted, based on a variety of benchmarks and evaluations, in order to better understand who the best employees at Yahoo are.

Once that is complete, the company is likely to begin cutbacks on compensation for the bottom 20 percent, including moving them out of Yahoo entirely. The company has suffered many rounds of layoffs over the years, which hurt morale badly due to the often haphazard nature of the cuts.

Mayer is aiming to make the process more organized; she talked about this performance-based system in a company meeting in September. At the time, she noted that employees would be judged on four “Cs” — culture, company goals, calibration and compensation.

In a follow-up memo and meeting, Mayer told staff about this process:

“Moving forward, we will have both annual goals and quarterly goals that we will all commit to, track, and grade ourselves based on … We will then cascade the goals down through the company at the department, team, and individual level …”

What she was talking about is similar to an employee evaluation method used at Google — where Mayer spent her entire career before becoming Yahoo’s latest leader — using an elaborate series of data points to judge how individual employees are doing.

In other words, Yahoos are about to get graded on a very clear curve.

Yahoo CEO Scott Thompson, who has developed a tough-talk reputation within Yahoo of late, went all sweet — well, less crabby, I guess — the day after the layoffs in which 2,000 employees were fired.

After dressing down top execs the night before the cuts by telling them the bad situation was due to their poor performance as leaders, his internal letter to the troops was also a bit cut-and-dried, with the not-very-sympathetic admonishment, “change is never easy.”

Not exactly what someone who just got their pink slip — or saw a close colleague get axed — likes to hear!

Today, Thompson opted to go with the softer side of Scott, in an internal memo I obtained titled “time to move forward.” It includes a promise to deliver a real strategic plan next week at an “All Hands” meeting. (I have previously reported that he was rolling out a new structure next week.)

Yahoo’s activist shareholder Third Point admonished Thompson yesterday for not having such a plan in place before making such widespread layoffs, which shed 14 percent of the workforce from the Silicon Valley Internet giant.

“While this action was unfortunately necessary and widely expected, Third Point, Yahoo!’s largest outside shareholder, is disappointed that this round of cuts occurred before CEO Scott Thompson has articulated his strategic plan for the Company,” it wrote in a letter (embedded below). “Shareholders deserve a management team and board who have a vision and strategic plan.”

Internally, there was also a lot of grumbling over the lack of a vision before the layoffs and worries that Thompson does not have a clear path for Yahoo.

“It’s like going into war and killing a big chunk of troops right before, without a plan in place about how to win,” said one person, in a common sentiment I heard from employees. “Everyone left feels shell-shocked and with no direction.”

In recent meetings about various options, including selling off a variety of Yahoo’s businesses, the former president of eBay’s PayPal payments unit has focused on a range of ideas, especially adding more commerce and data to the mix.

Apparently, all will be revealed next week, in what Thompson called “comprehensive plans for Yahoo!’s future.”

Thompson also did a little cheerleading:

“We can do this. We will do this! One thing I’ve heard repeatedly since I got here is that everyone wants to win again…I have seen big turnarounds before, and this company has the foundation, the spirit, the backbone, and the creativity to get it done,” he wrote. “Personally, I can’t wait to get moving.”

That’s good, because shareholders and employees have been waiting a long time for any forward momentum at Yahoo.

Here’s the memo below in its entirety:

From: Scott Thompson
Sent: Thursday, April 05, 2012 1:15 PM
To:
Subject: time to move forward…

Yahoos –

This was a tough week. Thank you all for supporting each other through a difficult time.

As hard as big changes like this can be, I was encouraged to hear support from so many of you who really understand our need to operate differently. That said, I also know many of you still have a lot of questions about where we’re headed and how fast we can get there. I shared a few thoughts in my note earlier this week and you’ll hear more at our All Hands next week.

We deliberately separated this week’s employee action from next week’s discussion of our strategy. The reason was simple: we felt it was only fair and respectful to those who are leaving and transitioning to take care of each of them before turning to our future.

Starting next week we will begin looking forward and our All Hands is just the beginning. You’ll be hearing a lot more from me and other leaders about our comprehensive plans for Yahoo!’s future. The immediate next step for all of us is to get clear on our goals, and then take action and move.

There’s a lot to do and that’s why I can’t stress enough that we all need to focus on getting stuff done. Getting stuff done is short hand for eliminating bureaucracy and barriers so we can all innovate as fast as our customers and the industry require. That’s pretty fast.

Our users want fun, informative, engaging experiences on all screens that they feel were designed just for them. Advertisers want it to be much easier to work with us and they want measurable ROI on their spending. We can do all that. But we won’t win by talking about the opportunity. We’ll win by putting our customers first, creating high-quality experiences, and iterating on them quickly. Great user and advertiser experiences are what will ignite excitement around our brand and get us growing again.

You’ll receive the official invite to our All Hands shortly and we want to know what’s on your mind in advance. If you have questions before we meet next week, please check Backyard for information and answers to your questions. If you don’t see the answers, please post questions on Backyard, or you can email questions directly to the leadership team.

We can do this. We will do this! One thing I’ve heard repeatedly since I got here is that everyone wants to win again. There is so much passion for Yahoo! — for what it was and for what we all believe it can be. Even after all you’ve been through, there’s a hard core crew of Yahoos who believe in this company and in its ability to thrive. I have seen big turnarounds before, and this company has the foundation, the spirit, the backbone, and the creativity to get it done.

Personally, I can’t wait to get moving.

Scott

And here’s the Third Point letter from yesterday:

TP April 4 Statement

Finally, here is a video of a “Reporters’ Roundtable” I did last week on CNET:

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.

Yahoo is preparing to begin layoffs of what could be thousands of employees starting next week, according to multiple sources, and is then expected to announce a new restructuring of the company the week after.

The swirl at the Silicon Valley Internet giant has grown more intense this week, as new CEO Scott Thompson has brought in top management for a series of meetings both Tuesday and Wednesday to outline the plans.

What has emerged — although sources noted that Thompson and others communicating the pending changes said nothing was yet set in stone — is the picture of a drastically slimmed-down organization with a focus on media, advertising and new but unclear “future” initiatives.

First the layoffs: Sources said the cuts will be deep and mostly aimed at the product, research and marketing units of Yahoo, which are likely to take place Wednesday. The ultimate goal, said multiple sources, is to cut many thousands from Yahoo’s staff of close to 14,000 employees, which is actually much larger, due to contract workers not officially in its roster.

The entire cut will not take place at once, said sources, since Thompson and others are still trying to figure out how to dispense with its ad technology org and, potentially, its search business. He has been in discussions with both Microsoft and Google about this, although there are other possibilities, too.

Both these parts of Yahoo together have about 2,500 staffers, whose fate is not yet sorted out.

Also still baking is the new structure, although sources said it is most likely to be comprised of a global media division, one that encompasses Yahoo’s communications and search businesses, and ones focused on global and also regional sales. There could also be a small organization of about 50 aimed at future innovation.

Americas head Ross Levinsohn is the likeliest exec to run the media arm, while Shashi Seth — who now heads search and marketplaces — would be the obvious candidate for the the communications/search one.

Thompson has already been conducting a search for a new worldwide sales head, although one possible internal exec for the job could be Rich Riley, who was recently running Yahoo’s Europe, Africa and Middle East region.

It is not clear how Chief Product Officer Blake Irving fits in the possible new org, since much of the development could now move to the decentralized units.

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.

Thompson, along with consultants he has hired from the Boston Consulting Group, presented the possible plan in front of Yahoo’s senior execs on Tuesday. That was followed by more meetings with a wider range of top management yesterday, although Thompson was not as highly specific in these meetings.

In fact, according to a half-dozen sources, Thompson apparently grew somewhat testy in one of the gatherings, when asked if there was a strategy he was going to announce in more detail to the group.

(Dear Scott, these are very talented employees who love the company and who have been through the wringer and it’s not their fault that leadership has failed them, so it might be a good idea to treat them with as much respect as possible right now.)

More to come, obviously.

What is Yahoo?

While that has been the perennially unanswered question at the Silicon Valley Internet giant for many years, according to dozens of sources inside and outside the company, Yahoo’s leadership is now deeply embroiled in an intense — and sometimes very tense and fast-changing — debate over a number of critical issues about what is expected to be the most sweeping restructuring in its history.

Top executives at the company are conducting what is likely to be a lively all-day “offsite” meeting today (which is actually taking place on Yahoo’s Sunnyvale campus) to continue to discuss, among other things: How and where the company will make large-scale cuts in staff, which I have previously reported were coming and will perhaps be numbering in the thousands; which businesses to sell off and which to keep, including its ad tech unit; the correct structure for the reconfigured entity; and who will be left to run it all when it is all settled.

Also up for debate is the best course of a two-pronged effort — being led primarily by CFO Tim Morse and members of his corporate strategy team — to renegotiate its search and advertising partnership deal with Microsoft, while also engaging in active discussions with Google about it taking over Yahoo’s search business.

“Everything is on the table,” said one person. “And anything could be blown up by Scott.”

The Scott being referenced is new CEO Scott Thompson, who has become something of a whirling dervish since he arrived at Yahoo only three months ago from the top job at eBay’s PayPal unit.

If shaking up the place — as he has promised in public and internal statements, including a recent memo in which he wrote that “real change is coming” — was his aim, Thompson is certainly doing just that and more.

Along with immediately initiating a massive effort to figure out the best way to restructure the long-troubled and ever-meandering company and all that entails, Thompson has also been meeting players all over Silicon Valley for advice; stopping and then restarting negotiating discussions with Yahoo’s Asian partners, visiting major advertising clients; and engaging in talks with activist shareholder Dan Loeb about settling a looming proxy fight, while also packing the board with allies to help fend off said battle.

And, oh yes, he also took a little time out from his busy schedule to sue Yahoo partner Facebook for patent violations.

But the real action is the remaking of Yahoo in his image. To do so, Thompson has been furiously evaluating the entire company, with the help of Boston Consulting Group and a small group of execs, especially Morse.

While it is all still undecided, he seems to be leaning toward Yahoo as a drastically slimmed-down entity without a central product group and with a simplified structure that includes global units — such as media, commerce and sales organizations — which will again be in charge of the entire development of their offerings.

(I will note, since I have been covering Yahoo since near its founding, this is a structure that has been in place before. In other words, at least for dinosaurs like me, there is nothing new under the sun here.)

The changes being contemplated include, as I have written previously, the possible sale or drastic reconfiguration of its ad technology business, which will effect at least 1,000 employees. Another 1,500 involved in Yahoo’s search business will also be impacted, depending on talks the company has been having with Microsoft, as well as Google, about better monetization.

Such a structure brings up a lot of questions about how, and by whom, it will be run. To figure it out, Thompson has been evaluating — sometimes rather brusquely — his own top managers, as well as looking for new ones outside the company, such as a search for a chief marketing officer and other key positions.

Confused? Perhaps, but not for much longer, said multiple sources, as Thompson moves closer to delivering his answer to the what-Yahoo-is question.

Yahoo PR — by the way, it will not escape Thompson’s change machine, either! — declined comment.

One of Yahoo’s most respected researchers, Raghu Ramakrishnan, who is the author of one of the most famous database textbooks, “Database Management Systems,” has left the Silicon Valley company to join Microsoft. He was also critical to the development of much of Yahoo’s personalization technology.

Sources said the chief scientist for search and cloud platforms at its Yahoo Labs unit will be a fellow on the software giant’s SQL team.

Ramakrishnan, who has been at Yahoo since 2006, is one of many key researchers to depart before what is expected to be a gutting of the company’s research division in upcoming layoffs and other cuts by new CEO Scott Thompson.

None of this exodus of high-level research talent comes as a surprise. Prabhakar Raghavan, the well-respected head of the Yahoo Labs unit and also recently its head of strategy, has recently left the company to take a job at Google.

Ramakrishnan came to Yahoo from a professorship at the University of Wisconsin-Madison. According to his bio from Yahoo, he was the “founder and CTO of QUIQ, a company that pioneered crowd-sourcing, specifically question-answering communities, powering Ask Jeeves’ AnswerPoint as well as customer-support for companies such as Compaq.”

A Yahoo spokesperson declined comment (but, trust me, it is true).

Prabhakar Raghavan, the well-respected head of Yahoo’s Labs unit and also recently its head of strategy, is leaving the company to take a job at Google.

The departure comes ahead of what will be very deep cuts in his division, which is in charge of long-term research at the Silicon Valley Internet giant, said sources, and is spread all over the country. More researchers at Yahoo — which is a very well-respected group — are also expected to go too and will be the subject of fervent recruiting interest by companies such as Google and Facebook.

Yahoo confirmed the move after I made an inquiry about it this morning.

In a statement, the company said:

“Yahoo! thanks Prabhakar Raghavan for his dedication and contributions to Yahoo! for the past 7 years. We wish him well in his next endeavor. Ash Munshi, CTO, will assume leadership for Y! Labs.”

It is unclear what Raghavan’s new role at Google is.

But, as head of Yahoo Labs, Raghavan’s research arena has been extensive, encompassing everything from data mining to algorithms to search.

He is also a consulting professor of computer science at Stanford University. According to his bio, Raghavan has “co-authored two textbooks, on randomized algorithms and on information retrieval.”

The Berkeley PhD had been CTO at Verity and had held a number of jobs at IBM Research.

More to the point, he was very well respected within the company, which seems to be curtailing its commitment to research as it attempts to turn itself around under the new leadership of CEO Scott Thompson.

Raghavan had been made head of strategy under former CEO Carol Bartz, who was fired.

He has been at Yahoo seven years.

Arriving at Silicon Valley’s Computer History Museum, in the heart of the tech industry, with the leader of the free world talking jobs and digital, you might expect fantastic wireless access.

You might, but not so much if you are a “local” reporter and can’t jack into the extra-secret-special wireless link the national White House press corps apparently has reserved for itself. (They also get a lovely noshing buffet, whilst we tech reporters have been instructed not to touch the pineapple and scones or else!)

Famished for coffee and carbs, we’re left with glomming onto the museum’s slowish wireless service — there are lotsa geeks here today jamming up the lines — and every now and then getting some juice from Google. The search giant blankets the Mountain View, Calif. area near its HQ with free Wi-Fi, but it fades in and out.

I am now reconsidering the antitrust investigations that the Obama administration is conducting against Google, as long as its signal is good enough to check Twitter.

So this liveblog of President Barack Obama’s LinkedIn Town Hall — which will center on jobs and is titled, “Putting America Back to Work” — could be glacial with not much news, much like what I am expecting from the event itself.

I’d certainly like to work, as long as the wireless does! (Plus, limited power outlets in the room, so it’s every reporter for herself!)

But bygones, while we await the Prez!

10:18 am: One thing that made me flee Washington, D.C., when I worked for the Washington Post, was all the rigmarole that surrounded the appearance of and access to politicians.

I get it, the security and all, and am all for it on a general safety level. But, no matter how you slice it, it hinders any kind of movement or genuine interaction, like being stuck at a really dull opera. All the world’s a stage and we are all merely waiting in traffic.

In contrast, and one of the joys of Silicon Valley, is that anyone can get up right up into the grill of the various billionaire potentates littering the landscape, engage in a debate and get a possibly real answer.

Thus, I am hoping for a lot here from LinkedIn CEO Jeff Weiner, who is going to moderate the hour-long session with the President.

By the way, while he is busy running the business-focused social networking site, Weiner is looking good in a fancy suit, almost as if he could be Secretary of the Internet. I’d vote for him.

10:28 am: Some painless but hip music is playing now, as we wait, wait, wait for Obama, who is set to begin in 30 minutes.

I wonder if the President is ever early. Wouldn’t that freak the peeps out?

(Obviously, I am bored, so I shall now go monitor Twitter to catch up on the latest in the new bad-marriage-or-not cat fight between Brad Pitt and his ex, Jennifer Aniston — as if we need him to tell us Angelina Jolie is more interesting. Frankly, Angie’s midday snack is more interesting than Jen.)

There is now what appears to be a Secret Service dude next to me, giving me a hairy eyeball. If I am jailed over my wireless protest, please give generously to my defense fund.

Free the Internet! Free the Internet!

10:35 am: Finally, the production guy is up giving out the rules. Turn off the cellphones, no making noise.

The head Secret Service guy then takes the stage. No getting out of your seat. No sudden movements. And no crossing the blue line in the front row.

“All joking aside,” he says, he will take you down. He also notes that if the President moves toward you to shake your hand, “do not move toward him.”

I love Secret Service agents — especially when played by Clint Eastwood — and wish I had one to give a few people in tech a little smackadoo on my behalf. And not only if they moved toward me!

10:47 am: This little frisson of excitement is followed by more waiting, as the final seats are filled up in the room, which is an unusually (and welcome) multi-racial and gender-balanced crowd for Silicon Valley.

Various White House aides skitter back and forth like nervous ground squirrels — I would imagine their life is one big effort to avoid any gaffe — so the Prez must be near.

I am actually looking forward to seeing him, as I never have in person and am looking forward to seeing the famous Obama charm and techie cred.

Indeed, he is probably the most fast-forward tech president there has ever been. That said, buffeted by more serious issues facing the nation, his administration has delivered on few — by which I mean none — of its promises around the digitization of the U.S.

Our high-speed broadband, for example, is still woefully slow, inordinately expensive and not easily available nationwide.

And I will not even go into the need for increased focus on math and science education or the importance of our broken visa policies.

But the topic today is jobs, which is an arena where Silicon Valley and tech shines in the U.S., even as manufacturing of it has mostly moved overseas. How tech can help improve in the creation of jobs will be issue No. 1 here.

10:55 am: Total silence with five minutes to go. I need the President around to quiet my kids.

Now, LinkedIn Chairman and VC Reid Hoffman comes in, so the event is probably about to begin.

And, indeed, Weiner emerges to cheers, to give a little speech on “changing the way we work … and connecting talent to opportunity.”

11:01 am: Then, the session starts right on time with President Obama.

He begins with a rote speech on jobs, which is nonetheless the most important issue he faces going into next year’s election.

11:14 am: Ah, wireless glitch! Back!

President Obama is inexplicably in the middle of a Medicare question, which gives him an opportunity to talk about the need for the rich to pay more taxes.

And pass his American Jobs Act, of course.

11:17 am: More on proposing legislation for retraining workers, such as the questioner’s mom.

Now to a group of email questions. The first is about when small businesses are going to get a break from onerous regulations and taxes.

President Obama says since he has been in office, he has cut taxes 16 times for those who create a business.

But he is not going to apologize for some regulations, such as those for the financial industry over the mortgage crisis.

“There are some regulations that have outlived their usefulness,” he says, but others not so much.

11:24 am: The next question is from a Chicago IT employee. Except she is not employed.

She is asking a question about keeping her skills up and what programs are needed.

“The best thing we can do for you is that the unemployment rate goes down,” said President Obama, but also adds that making it easy to go to school while waiting on a job is also important.

“Just looking at you, I can tell you are going to do great,” he tells her in an awkward effort at reassurance.

Thanks, Barack, but she needs a job!

11:28 am: A veteran is asking a question about transitioning out of the military.

Obama launches into a story of a medical technician who faced all kinds of experiences, but had to start over again with new classes when out of the military. He suggests some level of credentialing based on experience.

11:33 am: Obama gets to pick out someone from the crowd and manages to pick out a dude who is a former Googler — although he only says that he works down the street — and is out of work by choice.

He asks: “Will you please raise my taxes?

A plant? I wish!

President Obama asks the name of the start-up. “A search engine,” says the ex-Googler-in-disguise, who is Doug Edwards, an early marketing exec there who actually wrote a book on being an ex-Googler.

“That worked out well for you,” kids President Obama.

Everyone likes a rich-guy joke!

He is soon onto the idea that we’re all dang lucky and declares he does not want it to turn the debate over taxes into a rich-poor war.

Bottom line, he notes that we have to raise taxes on the very wealthy. Frankly, if we raised taxes on a bunch of folks in this room, it would help a lot.

11:42 am: A teach-training question, especially math and science teachers.

President Obama is all for it.

He is meaning well here, but all he seems to offer is a lot of bromides about the importance of education and errant related anecdotes.

Like one from IBM, where the company hires the kids in the program at the end.

President Obama wants students to see a direct connection between learning and jobs.

Then, he kind of says it again. Gosh, he can talk. How does the well-fed and wirelessly connected White House press corp take it? Lotsa donuts, I would imagine.

President Obama also wants us to turn off the electronics and video games for kids, too, thereby instantly losing the votes of my two sons!

Another laid-off guy is up at the mic. He had 22 years in IT management and is disheartened.

He wants a statement of encouragement from the CEO of America.

President Obama assures him that his track record of success gives him a leg up, but that the problem is the economy and the global meltdown, too.

It’s systemic, apparently.

“The problem is not you, the problem is the economy as a whole,” says President Obama.

That was the last question. Weiner, who has been sitting quietly (I know it was hard, Jeff, but good job), thanks the President and tells him that this is a big issue.

President does his thanks, too, for being able to speak, although not really that much was actually said.

And then a genuine moment, finally, of clarity.

“Look, we’re going through a very tough time, but we have gone through tougher times before,” he says. “But the trajectory we are going on is one that is more open, more linked …”

He talks about the need for being ready to take advantage of that opportunity.

“Things have gotten so ideologically driven, putting party above country,” he adds, that nothing is getting done. That’s why the people, the voters, have to demand leadership from their elected officials.

Or, presumably, fire them and let them try to find another job, too.

It might turn out to be the best idea yet, if these pols don’t agree on something and quick.

Yahoo, which will announce fourth-quarter earnings later today, is also laying off another one percent of its staff, according to sources.

The layoffs of well over 100 employees are taking place across the company, although cuts are largely in the media and advertising group.

Yahoo currently has about 13,600 staffers worldwide.

After initially declining comment, a Yahoo spokeswoman confirmed the move and released the following statement:

“The personnel changes we are making are part of our ongoing strategy to best position Yahoo! for revenue growth and margin expansion and to support our strategy to deliver differentiated products and experiences to the marketplace. We’ll continue to hire on a global basis to support our key priorities.

Today’s action impacts approximately 1% of the global employee base.”

The Silicon Valley Internet giant conducted a larger layoff of four percent of its staff–mostly in its product organization–in December.

It matters a great deal to the unfortunate employees at Yahoo who are being laid off this week for the reporting on the subject to be accurate and to entail some serious effort.

(It’s bad enough to lose a well-paying job in this still-tough economy, but to lose one over the holidays requires quite a lot more than incorrectly quoting a tweet off Twitter without checking first.)

And so here’s the deal, as BoomTown has previously reported, about what’s happening with Yahoo layoffs, set for tomorrow morning:

Yahoo will lay off about 650 to 700 employees.

Those layoffs will come largely from its product division, headed by Blake Irving, although there could be firings in other parts of Yahoo.

The layoffs are mostly in the U.S. units of Yahoo.

Those let go will be notified tomorrow and will likely have to leave Yahoo facilities immediately. Company sources said the action will be completed by early afternoon, Pacific time.

It’s definitely bad timing for Yahoo, given it is less than two weeks until Christmas, but cost-cutting at the company seems unavoidable as it seeks to improve revenue and spur growth.

Still, it is another sad day in Sunnyvale, Calif., where the iconic Internet giant is headquartered.

Although Andy Rubin’s keynote at D: Dive into Mobile is scheduled for just before dinner, expect to hear a lot of talk about dessert. On the menu are Froyo, Gingerbread and perhaps even a hint of Honeycomb.

Google did release a couple of tasty treats already on Monday–announcing plans for the Samsung co-developed Nexus S as well as the release of Android 2.3 (Gingerbread). But I hear the cookie jar isn’t quite empty yet.

In between sugary snacks, Kara Swisher and Walt Mossberg will pepper Rubin on the many issues facing Android and the wireless industry. Mobilized will have live coverage of the session at this spot beginning around 6:45 pm PT.

Liveblog

6:37 pm: The crowd is still settling into their seats here at the Ritz-Carlton San Francisco, the swanky home to the inaugural D: Dive Into Mobile.

6:40 pm: Lights dim. Kara Swisher and Walt Mossberg take the stage. “My husband, Walt Mossberg, and I would like to welcome you to this intimate dinner,” Swisher quips.

6:42 pm: Ironically, the crowd was asked to silence their mobile devices, but Kara says they should just feel free to leave them on.

6:44 pm: It’s Rubin time (and he has brought a satchel of goodies with him).

Rubin is asked about the Nexus One and why it didn’t shake up the business model. “We bit off a little more than we can chew.” Rubin says that they were hoping for a model more like that in Europe, where people can pick a phone and then separately pick service, typically at retail stores like Carphone Warehouse. “We were trying to do that model in the U.S. and only do it online.”

6:46 pm: Kara: So have you given up on that business model?

Rubin: With Nexus S, which is the thing we announced today, we still have that notion of an unlocked phone. But we are not selling it ourselves, but through traditional channels, in this case Best Buy.

6:48 pm: Walt: How is Android doing?

Rubin: Android started as an eight-person start-up. “During that time at Google we obviously staffed up.” Now there are 172 different phone models using Android after the OS was launched two years ago with one, the T-Mobile G1.

Rubin credits the quality of the software and the open nature of it.

6:49 pm: Walt: I notice more and more they are taking on the personality of the carrier, not Google, not the handset maker. There are lots of what I would call craplets. Verizon, for example, swapped out Google for Bing. Is there a danger it is being taken over?

Rubin: That’s the nature of open. That’s actually a feature of Android.

He takes a swipe at Windows Mobile, saying that the alternative is a commoditized world where all the phones have to have a start menu in one place and all the icons have to be tiles.

6:54 pm: Kara: Do you consider yourself the Microsoft of phones in that regard?

Rubin: No. We’re probably more like the Linux of phones, and that’s a true statement.

Walt: You mean hard to get drivers for, only for geeks, no real consumer would buy it?

Rubin: No, I think we’ve already proven that wrong. Bad analogy.

6:55 pm: Discussion about all the crapware that comes on many phones.

Rubin: The consumers are voting and the consumers are voicing their opinions.

6:56 pm: Rubin has some relatively nice things to say about the iPhone.

“I think everybody is embracing the iPhone. They are pretty open.”

Rubin says that most developers actually are having a pretty easy time getting their apps approved by Apple.

6:57 pm: Kara: How do you consider Apple as a competitor?

Certainly they make great products, Rubin says–robust, solid, good user experiences. A lot of consistency across applications. More recently I see them getting involved in the other end of the spectrum–services like a bookstore, the app store.

6:59 pm: Walt: What about Apple’s massive data center? That’s another area of competition for you guys.

Rubin talks about the power of Google’s ad-based model, which allows the core advertising to fund all kinds of applications.

Walt: Do you think Apple has the DNA to do this?

Rubin: “My assumption is Apple is a company that learns from its mistakes.”

7:01 pm: Kara and Walt: Are you profitable? Is Android profitable? Does Android make any money?

Rubin: We’re making money on the advertising that’s generated through Android.

Walt: Are you profitable if it was broken out as a separate business?

Rubin: Yes. [Wow. I'm curious about the math, but maybe if you add all the searches on Android-based devices.]

There’s no way I would have ever been profitable as a start-up. I probably wouldn’t have made it as a separate company.

7:06 pm: Walt: How do you see the rest of the competition beyond Apple?

Rubin: I don’t think it’s ever going to be just two [Apple and Android]. There’s a lot of innovation and a lot of ideas out there.

Rubin says there is a fundamental advantage to Android and iPhone since they are new and designed from the ground up.

He notes even Windows Phone 7 has legacy code from the original Windows Mobile from way back when.

“You just have this package of stuff that was invented before the Internet,” Rubin says. “When the architects built that product, they didn’t have the Internet in mind.”

7:08 pm: Walt: Is there anything you do like about Windows Phone 7?

Rubin: It was a big bet. They struck upon that notion of the centerpiece of the main tiles. It’s a good 1.0 product. It does look different and it does look unique. It’s solid. I’m not the predictor of being successful.

He says if he were to give advice to Microsoft, he would suggest that it give more freedom to carriers and phone makers so the devices don’t look the same.

Kara: Have you gone to Finland to woo Nokia?

Rubin: I haven’t been to Finland.

Walt: Forget Finland, have you tried to convince Nokia?

Rubin just laughs (a-ha).

7:12 pm: Kara: The discussions with Nokia–talk about them in detail.

Rubin: The company has new leadership [referring to CEO Stephen Elop]. They are evaluating lots of alternatives. I’m open-minded and a big proponent of Android.

Rubin again declines to talk about any meetings he may have had.

7:14 pm: What about the challenge of iconic products like RIM?

Rubin: Talks about the challenge of legacy and points out Motorola had that problem when it became overly dependent on the Razr. Then, “they bet the company on Android,” he points out.

Rubin said RIM is doing the right things–acquiring assets like QNX and DataViz to build a more modern operating system.

7:16 pm: Walt points out that RIM will be here Tuesday–PlayBook tablet in hand.

7:16 pm: Back to the discussion about persuading companies to use Android.

Rubin: If it’s good–and we all believe that it’s good–everybody can use it.

“You don’t need to be a partner of Google to run Android.”

7:17 pm: Walt asks about tablets. Are they exciting to you? Are they important to you? Can they replace laptops for some people?

Rubin: I think what is going on in tablets is interesting. It’s fundamentally changing the model of computing interaction.

It is much more physical. You touch it. You feel it.

7:19 pm: What changes in the paradigm? It’s not a laptop. It’s not a phone.

Rubin points out that we used to have PDAs, but the cellphone eventually replaced it. The tablet is a sort of in-between device so the use case is less clear. You might definitely have it on the couch, but maybe not on the subway.

7:21 pm: Walt: What makes it more interesting and more immersive? There is something different there?

Rubin: If you do a good job, what you’ve done is make it a reflex. Like a car. You learn how to drive and you can drive almost any car. You don’t get distracted by things. That’s the result of many, many years of evolution. That’s true of any consumer product. They become almost like second nature for you.

7:24 pm: Kara and Walt ask about privacy.

Rubin: There is nothing in open source Android OS that sends keystrokes or what applications you use to Google.

He encourages people to look at the source code.

Walt: There are Google services that do collect certain things?

Rubin: Yes, like on other platforms. But he encourages people to read the company’s privacy policy.

7:27 pm: How do you overcome the perception that Google wants to collect more information than the others?

I think you just have to be transparent. You have open source–be inspectable. Any other interpretation is either FUD or just people who don’t understand.

7:28 pm: On to the goodie bag. Rubin pulls out a Nexus S. Says it is his personal device.

Kara: Oh good. She grabs it and pulls it close to her.

Now Rubin is showing the features, screen, etc. He’s talking about the Near Field Communications technology that is actually printed inside the back of the case. NFC allows a phone to scan specially printed tags.

Walt: Is that what sends all the information back to Google?

Rubin: Laughs. Goes back to demoing NFC and showing the Nexus S scanning a tag, which sends a URL for a video of the Nexus S to the phone, which then starts playing.

7:31 pm: Rubin talks about the applications: Buying coffee, getting coupons.

What we are hoping is third-party developers create a lot of cool apps. Devices can also use NFC to exchange contact info between two devices as well, kind of like beaming in the old Palm days.

7:32 pm: Rubin is talking abut the Nexus strategy.

To give a “Pure Google” phone. Google works with the hardware maker to take maximum advantage of Android’s features.

7:35 pm: What’s new with Gingerbread?

We added a garbage collector. Added broader voice over Internet Protocol support. Can cut, copy and paste without a trackball.

7:36 pm: Walt: What about video calling? I know there are third-party apps that do that. It seems like a natural thing that it belongs in the phone function.

Kara: FaceGoog or GoogleTime.

Rubin: There’s a whole bunch of software engineers hitting their keyboards back in Mountain View. If consumers want it, we’ll add it. [He strongly hints that it is coming, points out there already is Google video chat for PC.]

7:38 pm: Rubin reaches into his bag of tricks again. Pulls out a prototype Motorola tablet to show a forthcoming version of Google’s mobile map application.

7:38 pm: Shows the improved 3-D abilities and new panning and zooming options. What we are showing off here is some pretty cool performance.

“It will be available for cellphones in a matter of days,” Rubin says.

What allows the new presentation is that maps are no longer a series of tiles, but rather vector graphics.

7:40 pm: Vector data is smaller and more efficient, so users can load data in case they go offline. “You could load a whole state,” Rubin says.

This app runs on Android only for now, though it will work on tablets and phones.

Walt: What about PCs?

Rubin: That would be a natural extension.

7:41 pm: What version of Android is running on that tablet?

Rubin: Honeycomb [the next version of Android, due out some time next year]. There are no buttons on the Motorola tablet. He’s showing his personal email again.

7:43 pm: More on Honeycomb: We added new APIs to Honeycomb that allow an application to split its views to multiple views. On a a tablet they can be side by side, while on a phone they might be one after the other.

7:46 pm: On to Q&A.

7:46 pm: What about the Chrome OS team? What’s the delineation between the two?

Rubin: That’s a good question. Google was born on the Web. “I don’t think it would be doing its job unless it reinvested in the Web.”

But evolution of the Web had stagnated a bit, prompting Chrome. “It’s kind of slowed down a bit.”

Apps vs. Web?

There’s no need to argue. We’re doing both, Rubin says.

7:50 pm: What are the plans for the Android team to focus on the enterprise?

We did a little bit, Rubin says, but he likens it to baby steps. Support for VPN and some secure browsing. Gingerbread has some added features like remote wipe. Each release you will see more and more.

7:51 pm: App discovery. What are your plans?

Rubin: This is all evolving. The Android market is evolving as well. Gingerbread allows “related applications.” We are always adding features.

As a search company, if we can’t help you discover apps, I think we have a problem. We should be very easily able to organize a few hundred-thousand apps.

7:53 pm: Question about mobile payments; What is Andy Rubin’s vision? Groupon?

Rubin: I think there is a lot of opportunity. It is not an opportunity that is going to be seized by one company. Today Android does carrier billing integration, so you can put apps on your carrier bill. Creates an efficient micropayment option.

With Nexus S having added gyroscope capability, can see things from even within a store. Should help make, for example, better coupon apps.

7:57 pm: Android on TVs?

Rubin: That’s exactly what Google TV is. It is Android running on a set-top box. The first versions of that are running an Intel processor.

Have demonstrated the same app can run on both a three-inch screen or a flat-panel TV.

People are building all kinds of things. Refrigerators, ovens, automotive. Rubin says the nice thing about open source is that he and Google don’t have to be involved in every use. “We knew what to do to make it scale as widely as possible.”

7:58 pm: Question about carrier data plans and pricing.

Rubin: Average usage on an Android phone is 440MB a month. Rubin points out we are at a bandwidth crunch, but that it tends to be a cycle. New networks tend not to be overwhelmed by demand at first, but then the demands grow. Then new networks come along.

How should OEMs try to differentiate?

Rubin: I think HTC has done a really good job with Sense. Motorola has Blur. People are really differentiated.

Rubin says he often hears complaints about fragmentation. “Fragmentation” is the wrong word. Different phones do things differently, but that’s differentiation. Basically the apps are still compatible, Rubin says.

8:04 pm: Is Android too clunky? Will we see a sea change where Android really gets more user friendly?

Rubin: I would probably characterize Android today as an enthusiast product for early adopters–or wives of tech enthusiasts.

8:05 pm: Rubin says the company made some concessions that led to “geeking it out.” But then there are apps that offer easier customization and personalization.

8:07 pm: Walt points out places where it requires an extra step to do things like compose an email, while the iPhone does it in a single step.

Rubin: Yep. We get it. You will see the fruits of that investment in the tablets first and then in the phones. It’s going to get better. Honeycomb will be a good start

8:08 pm: Applause and they exit stage. ‘Night.

Yahoo is indeed preparing to lay off employees, in a reduction in force that will be done in December.

But the layoffs, first reported in TechCrunch at 20 percent, will be closer to 10 percent and be almost completely centered on the product organization under Chief Product Officer Blake Irving, said sources close to the situation.

That would mean layoffs of about 650, since that part of Yahoo has about 6,500 employees.

Yahoo, in fact, just put out a statement saying the 20 percent figure was “inaccurate.”

Said the company in a statement: “Yahoo! is always evaluating expenses to align with the company’s financial goals. However, a 20% reduction in Yahoo’s workforce across the board is misleading and inaccurate.”

Well, kind of, because it is a big layoff nonetheless.

In addition, said sources, the layoffs might result in the outsourcing of some functions at the company.

Even at a lower figure, the move will surely be yet another blow to morale at the much-buffeted Silicon Valley Internet giant.

Just this week, for example, Google gave each of its employees a 10 percent pay raise and $1,000. Facebook, similarly, is showering benefits on its fast-growing pool of workers.

Along with a spate of top-level executive departures, Yahoo is under scrutiny by Wall Street, as well as the subject of much takeover speculation.

This has put Yahoo CEO Carol Bartz under even more pressure to show results after almost two years as top manager.

Known as an exec who knows how to cut costs, she has yet to prove she can grow the Yahoo business with new innovations.

Yahoo has just over 14,000 employees. It has undergone many layoffs and restructurings, but only once in a major one under Bartz.

Earnings from a spate of top digital companies will be reported in the coming days, including for Google (April 15), Yahoo (April 20), Apple (April 20), eBay (April 21), Netflix (April 21), Amazon (April 22) and Microsoft (April 22).

Most Wall Street analysts expect good news from the group as a whole, especially as the economy recovers. Bright points include the e-commerce and advertising markets, both of which have been rebounding.

In addition, extensive cost cuts over the last year and easy year-over-year comparisons for most companies will brighten the financial picture.

That’s the hope at least, especially since tech stocks have been performing less robustly than the S&P of late.

Of all the tech companies, analysts are most worried about Google (GOOG), which has seen its share price pushed down over a variety of issues.

There are good reasons for long-term concern, despite expected strength in its core search business, when the search giant reports tomorrow. But from its battle with China to possible regulatory scrutiny from the federal government to its escalating fight with Apple, Google is an ongoing digital soap opera.

And while its Android mobile operating system is growing, there are still questions about if and when Google can make bank from the business.

Yahoo (YHOO), the perennial weakling in recent quarters, is getting much better reviews, especially as the display ad market improves. Also a plus: Cost savings from its online ad and search partnership deal with Microsoft (MSFT).

Yahoo’s stock has been rising of late above its consistent $15 range to over $18 yesterday. Crossing to a $20 a share price would be a significant Rubicon for Yahoo.

Apple (AAPL), though, seems to have remained an investor darling and is expected to turn in another stellar quarter. Investors will be looking to hear if the company will release actual iPad sales results, which some think the secretive company is lowballing.

Also of interest are sales of its powerhouse iPhone, as well as any more news on the new operating system for it.

For eBay (EBAY), improvements in its main marketplace business, as well as continued strength in its PayPal division, will be closely watched by investors.

But continued pressure from a range of new and old competitors and eBay’s ability to respond and grow remain a worry.

Netflix (NFLX), though, is hindered only by existing bullishness around the stock. Wall Street is expecting strong results from the online video rental company, especially as it continues to add subscribers and innovate its intense customer service focus.

For Amazon (AMZN), the impact of the Apple iPad and e-book prices will likely get a lot of attention, even though it has a much larger business beyond its Kindle e-reader. The improvement in the e-commerce arena is likely to be a boon to Amazon.

Last of all to report will be Microsoft, whose earnings are more complex, given its many businesses.

While the focus will be on sales of Windows 7, in the digital arena, analysts will likely be interested in the status of its Yahoo partnership, the gains in search share for Bing and what plans the software giant has related to the cloud-computing arena.

Yesterday, BoomTown began grading the performance of Yahoo CEO Carol Bartz, after she gave herself a B- for overall performance for the year since she took over the troubled Internet giant.

But I decided to be more specific, splitting the grades into five categories: Management, financials, product innovation, deal-making and moxie.

For management, I gave Bartz an A-, because she has been a definite improvement on previous leadership in terms of decision-making, speed and essentially grabbing the mantle of control firmly from the start.

Some thought I was too generous and others thought the grade should have been an A+. Which means it was just about right!

Today, let’s look at financials–by which I mean Yahoo’s fiscal performance and its stock price.

In this regard, Bartz only gets a C++ (it’s a techie joke, get it?).

I could have given her a B- here, I guess, but–to me–C+ simply means financials have remained in a holding zone under Bartz, so she does not deserve to be completely decried, or applauded either.

Why? Well, let’s start with the stock.

While Yahoo (YHOO) shares are up about 38 percent for the year, which is a good thing, they still lag those of other Internet companies, as well as the market.

In the same period, the Nasdaq was up about 44 percent, Google’s stock has doubled and Microsoft (MSFT) shares are also up a lot more.

In an interview with Bloomberg recently, Bartz claimed that Yahoo was in the “penalty box” with investors–a hangover from former management, presumably–and this is the reason for its weaker stock gain.

Whatever. But Bartz has been the CEO for a year and Wall Street is still holding out. Thus, she has to fully take the blame instead of pointing at the previous administration.

In other words, former CEO and co-founder Jerry Yang and the Yangtanic are ancient history. So, all is forgiven, Jerry (call me!).

Bartz also blamed the recession for Yahoo’s continued revenue decline in 2009, about 12 percent overall in the most recent quarter.

She told Bloomberg, “We came out of one of the worst climates ever. And if you look at growth of Fortune 500 companies, only being down 12 or 15 percent is damn good. I’m not going to apologize for our growth.”

Again, whatever. But she runs a company in a high-growth industry and is not selling hams or socks, so perhaps bragging that being down 12 to 15 percent is “damn good” is a bit of a stretch.

(Microsoft certainly did not crow over its 14 percent decline in revenue in the most recent quarter even though it beat expectations, and its fiscal results rely a lot on something that does get profoundly affected–namely, sales of PCs–in a recession.)

Specifically, in the third quarter, Yahoo’s search advertising revenue was off 19 percent, and display was off eight percent at “Owned and Operated” sites on Yahoo.

Google, in contrast, reported a seven percent rise in its third-quarter results, and its execs projected a mood of smooth sailing ahead and no more econalypse. Financial performance at Amazon (AMZN) was also way up, as it was at Netflix (NFLX) and Apple (AAPL).

Still, Yahoo’s fiscal performance relies a lot on premium branded advertising, so it has remained weaker and will do so until the economy really comes back.

Many analysts are predicting exactly that, with double-digit sales growth in this area ahead.

And Yahoo’s bottom line is likely to get a boost when its costs are off-loaded to Microsoft, as part of the search and advertising partnership Bartz struck with the software giant earlier this year. The deal awaits regulatory approval, which is likely, and will then start to kick in later in the year.

Still, a dark cloud hangs ominously over the persistent search share declines Yahoo has suffered, which Bartz and others attribute to loss of toolbar and other distribution deals that Google (GOOG) and Microsoft picked up.

But query growth rates are also down and that’s a red flag, especially since Microsoft and Google are up a lot.

Nonetheless, depending on how these various parts of Yahoo revenue sort themselves out, along with Bartz’s cost-cutting, Yahoo’s bottom line is most likely to look better in the quarters ahead, so the stock could certainly go up quickly.

And so could her financial grade. Bartz is well known for being great at managing the bottom line and Wall Street expectations, so I suspect it is top of mind for her.

That said, once that registers, everyone will then be looking for not just a return to normal, but for actual growth.

And that can only come from product innovation–the name of the game in Silicon Valley–which is what will be on the grading block Monday.

Essentially–although AOL is located in New York and not California–it’s going to be like tremors before the Big One at the online company today, as about 100 employees are laid off.

Sources said the cuts, first reported by Valleywag’s Ryan Tate, will be widespread across AOL, even as the company inches ever closer to being spun off from its corporate overlord, Time Warner (TWX).

That will come within the next month, once the spate of regulatory comments and approvals is in place, said sources.

And during this time, AOL CEO Tim Armstrong’s “Project Everest”–the code name for cost-cutting across the company–will be chugging along to its final destination.

After tomorrow’s small cut, sources said, Armstrong has told employees he is seriously considering a suggestion made to him on a listening tour of AOL, which he took in his first 100 days on the job, of asking for voluntary departures that would include some sort of buyout.

It’s unlikely that that will be enough to achieve the kinds of cuts needed to bring costs in line with depressed revenue at AOL.

At its third-quarter earnings call last week, Time Warner reported that AOL revenue was down 23 percent. In addition, subscription revenue, which will continue to shrink, was down another 29 percent, and advertising revenue, which is supposed to improve one day, was down 18 percent.

Thus, with that performance, AOL is likely to do a massive layoff of upward of 1,000 employees.

That action will take place right before or, more likely, at the same time or right after the spinoff.

In other words, not very happy holidays for some.

But AOL is not alone in making cuts in the tech space. Last week, both Microsoft (MSFT) and RealNetworks (RNWK) laid off staff, as did Electronic Arts (ERTS) yesterday.

Here is a recent interview I did, while in Germany, with Armstrong, where he talked about AOL’s prospects:

]]> http://allthingsd.com/20091110/aol-small-layoff-today-a-voluntary-buyout-and-then-the-big-one/feed/ 0 http://allthingsd.com/20091105/realnetworks-to-lay-off-four-percent-of-staff-today/ http://allthingsd.com/20091105/realnetworks-to-lay-off-four-percent-of-staff-today/#comments Thu, 05 Nov 2009 08:34:22 +0000 Kara Swisher http://kara.allthingsd.com/?p=20317

The Seattle area is going to get another jobless jolt today, with RealNetworks planning to lay off four percent of its workforce, sources said.

That’s a small number–just about 70 people out of its 1,700-person staff–but the move comes on the heels of layoffs of another 800 employees at nearby Microsoft yesterday.

The software giant has cut thousands of jobs over the last year, part of a move to eliminate 5,000 positions by mid-2010.

While the dismissals–which are likely to be announced by managers to affected RealNetworks (RNWK) employees sometime this morning–will be global, both companies are tech leaders with headquarters in the Pacific Northwest.

According to sources, the reasons for the layoffs at RealNetworks are, as was the case at Microsoft (MSFT), to realign the workforce after the recent economic downturn and to control costs.

But RealNetworks could also hire back some of the laid-off employees, as other parts of the company are expanding.

The company had signaled the possibility of staff cuts previously, but had not been specific.

The last staff cuts at the company, which makes digital media software and tools, were larger, about 130 employees sacked about a year ago.

RealNetworks announced better-than-expected third-quarter earnings last week, barely returning to profitability by cutting costs to make up for weaker revenue.

(Digital Daily’s John Paczkowski contributed to this report.)

]]> http://allthingsd.com/20091105/realnetworks-to-lay-off-four-percent-of-staff-today/feed/ 0 http://allthingsd.com/20091023/liveblogging-the-microsoft-first-quarter-earnings-call-look-wall-street-no-hands/ http://allthingsd.com/20091023/liveblogging-the-microsoft-first-quarter-earnings-call-look-wall-street-no-hands/#comments Fri, 23 Oct 2009 14:42:52 +0000 Kara Swisher http://kara.allthingsd.com/?p=19858

Well, well, well, that financial imp at Microsoft–CFO Chris Liddell–pulled a fast one on Wall Street and turned in first-quarter earnings that blew away all estimates and even the whisper numbers.

While revenue and net income were down for the third consecutive quarter, they were not as bad as investors had expected.

Perhaps those Microsoft (MSFT) financial predictions were no good, but the results were a strong sign of recovery at the software giant.

BoomTown liveblogged the morning conference call with Liddell, which took place at 7:30 am PT–thanks for the Kiwi-laced wake-up call, Chris!

(You can see the financial slides of the Q1 performance here.)

7:34 am: “It might have been the bottom of the economic reset,” said Liddell in the opening. “I’m very happy.”

Still, Liddell, who has been a glum goose for many quarters now, could not quite do cartwheels, noting that the economy was “still challenging.”

He also still repeated his favorite term for the market, calling it: “The new normal.”

7:38 am: Other investor guy, whose name I always forget (and who is Bill Koefoed, by the way), got on and went through the numbers. He also sounded deeply relieved and noted that it looked pretty good out there.

Liddell returned and said Microsoft was “well-positioned” to exit the econalpyse stronger than competitors.

Not so bad, although he expected personal computer and hardware sales be weak still and was not promising anything.

The online and search and advertising partnership with Yahoo (YHOO) was also on track, said Liddell.

“In summary, I feel great about how we are executing,” said Liddell, who made sure to give credit to “cost discipline.”

It was nowhere near the strong performances of Google (GOOG) and Apple (AAPL) recently, but allowed Microsoft some much needed breathing room.

7:51 am: Question time!

The first was about when the launch of Windows 7 would start bringing home the bacon.

The next was about “channel inventory build,” which was like asking Liddell to be a soothsayer. “Net positive,” he opined.

The third question was about costs from the transition of the Yahoo deal and the contribution.

Costs will up front and there will be a contribution in the “hundreds of millions.”

Next: The future of cost cuts.

“I see that as the journey that never ends,” said Liddell.

Memo to PR head Frank Shaw: Cancel the truckload of caviar for a big honking party in celebration of these results. Stat!

7:58 am: I missed one question, since it was so boring, as was the answer.

Then a good one came about the deployment of Windows in corporate environments and elsewhere.

“All of the feedback we get so far is positive,” said Liddell, not that he is bragging or anything. “The sales in retail, we are expecting to be very good.”

Another cost question, this time about whether more investments are coming in the years ahead.

No ramping back, thank you very much!

The next question was about the impact of netbooks on the bottom line.

Not bad, but not huge, said Liddell.

What about display advertising online? In line with the weaker market, said Liddell, but it should improve.

8:09 am: PC demand? Liddell notes the “robustness” of the PC, which Microsoft has actually been pooh-poohing over many quarters.

Liddell said he saw better days ahead, perhaps because past ones had been weak, especially business PCs. “That can’t continue forever,” he noted.

A question about Europe. “Relatively weak,” said Liddell, while emerging markets were stronger.

“This calendar year is transition to next calendar year,” said Liddell.

A query about Windows 7 revenue recognition, which comes when Microsoft sells to OEMs.

8:14 am: More on OEMs, who are the big buyers of Microsoft’s operating system software.

Next up: Another question about outlook.

“Generally speaking, we are seeing good adoption of our products,” said Liddell, but the true rebound is coming next year.

The last question is about Windows Live.

It’ll get better, but next year, folks!

Translation, if you imagine Liddell channeling “Annie”: The sun’ll come out tomorrow. Bet your bottom dollar that tomorrow, there’ll be sun!

Enjoy this lovely video of the classic song:

]]> http://allthingsd.com/20091023/liveblogging-the-microsoft-first-quarter-earnings-call-look-wall-street-no-hands/feed/ 2 http://allthingsd.com/20091020/chartastic-heres-yahoos-q3-financial-highlights-now-with-even-more-bars/ http://allthingsd.com/20091020/chartastic-heres-yahoos-q3-financial-highlights-now-with-even-more-bars/#comments Wed, 21 Oct 2009 05:06:28 +0000 Kara Swisher http://kara.allthingsd.com/?p=19658

Yahoo reported its third-quarter earnings earlier today, a pretty good performance in which it soundly beat Wall Street expectations with a stronger net income than expected.

While revenue at the Silicon Valley Internet giant was down, also as expected–both owned-and-operated search and display advertising saw big declines, 19 percent and eight percent–cost-cutting by CEO Carol Bartz and the sale of the company’s stake in China’s Alibaba.com seem to have more than made up for it.

You can read BoomTown’s liveblog of the conference call by CFO Tim Morse here, but please also enjoy Yahoo’s (YHOO) financial highlights presentation, as well as its condensed financial documents, full of more numbers than you will ever want to crunch.

And, yes, Tim Morse, because I know how little attention the work of accountants get, I have actually read them all!

Here they are:

YQ3_Q309EarningsPresentationFINAL –

YHOO Condensed Financial Documents –

]]> http://allthingsd.com/20091020/chartastic-heres-yahoos-q3-financial-highlights-now-with-even-more-bars/feed/ 2 http://allthingsd.com/20091020/liveblogging-yahoo-third-quarter-conference-call-bartz-comes-down-with-something-and-cfo-carries-on/ http://allthingsd.com/20091020/liveblogging-yahoo-third-quarter-conference-call-bartz-comes-down-with-something-and-cfo-carries-on/#comments Tue, 20 Oct 2009 21:15:15 +0000 Kara Swisher http://kara.allthingsd.com/?p=19647

Uh-oh, Yahoo CEO Carol Bartz was expected to appear on the Internet giant’s third-quarter earnings call, but she has apparently “came down with something,” according to CFO Tim Morse.

BoomTown is sending over chicken soup right now, but let’s hope she gets her vaccinations tout de suite!

Worst of all, no sassy quotes or cursing, replaced by a very earnest Morse, who sounded like he was once a Boy Scout.

After the markets closed, Yahoo reported better-than-expected earnings on still lackluster revenues.

Overall, the conference call boiled down to one quote from Morse that seems to have been selected as the Yahoo (YHOO) buzzword of the moment:

“The theme for third quarter was stabilization.”

2:02 pm PDT: Investor stuff from guy who sounded like a robot that I completely ignored, since I was much more interested in a conversation between two women about a bad date this past weekend, which I eavesdropped on in its entirety while liveblogging from a Starbucks (SBUX) in San Francisco.

By the way, the man whom the ladies are ripping was a very unstable date!

2:04 pm: Morse jumped on and gave everyone the bad news about Bartz being sick and the good news about the better-than-expected net income, while also updating all the various happenings of the quarter.

“I am happy to report that our Q3 revenue came in above our guidance range,” said Morse, who sounded somewhat jaunty.

Morse reeled off numbers, numbers and more numbers, some stuff about the new marketing campaign ($18 million spent so far and $45 million in the next quarter!) and other stuff about the cost cuts and fourth-quarter guidance.

Also, no sale of the company’s Alibaba in China or the Yahoo! Japan stake, thank you very much!

2:12 pm: Morse also gave a quick update about the search and online advertising partnership Yahoo has struck with Microsoft (MSFT).

His message: The Silicon Vally Internet icon is not out of search, because it is not about the algorithm, but a better search product.

Tim, you might want to roll that claim back, especially since you also might want to notice how well Google (GOOG) has done with its giant math-brains in the search business.

Morse tried mightily to channel Bartz on search, using a comparison she has made about the Intel (INTC) chip, which is widely used by computer makers. Said Morse, it’s the “differentiation” that matters!

I wonder if Yahoo will keep repeating that one, even as its search share continues to decline.

But Morse did make a funny about how many ex-Yahoos are on the Microsoft payroll now, so the partnership transition should go smoothly.

Well, there’s that!

2:28 pm: Morse mentioned Yahoo’s analysts day next week, and then opened up the call to questions.

Analysts always ask very dull questions at earnings calls and this one proved no different.

The first was about display run rate and about the search market in comparison to Google.

What’s the good word? Stabilization, of course!

The next question was about eBay (EBAY), which seems far from the point.

Morse agreed and cut it short.

Then, a question about guaranteed placement and stock buybacks. Zzzzzzzzz–even Morse sounded bored.

The Starbucks lovelorn ladies had left by now, so I was too.

2:37 pm: The next question concerned the affiliate business and how it might be affected by the Microsoft deal.

I immediately summoned the barista, since it was clearly time for a double espresso!

A question came next about when the display ad business would recover from the econalypse. Morse: Stabilization!

Then, a query about gross margins and whether they can be maintained. Morse was not saying, except to point out that there was a “good, old-fashioned, get-your-hands-dirty” attitude at work at Yahoo now about watching costs.

I was suddenly worried about dirty-handed Yahoos, just when the CEO is sick!

Use Purell, please–or suffer the wrath of Judy!

2:43 pm: Another question on ad sales and quality. Thus, I moved onto mainlining coffee beans en masse. I long for a visit from Juan Valdez!

Then, a question about Q4 guidance, which was not good enough for one analyst, who wanted more.

Morse did not really bite, although he talked a lot.

Next, a question about slow-growing page views and what was Yahoo planning to sell of its various assets.

Morse tried to be all silver-lining about page views and would not talk about specific divestitures (nor did he mention the appointment of a new head of Yahoo M&A).

“We continue to look at the landscape,” he said.

What about more job cuts or hiring, since Yahoo added 200 people in the quarter? Morse noted Yahoo was staying strong in tech talent and was “putting feet on the street” in advertising.

Also something about paid inclusion, but a new person at Starbucks was having a really good cellphone argument, so I zoned out of Morse-talk for a second!

2:56 pm: A question about premium and nonpremium inventory. Looks good on premium, said Morse.

The next query was about the different metrics between the new and old homepage, as well as a request for more info about the analyst day next week.

Morse refused to “steal my own thunder” on what is going to happen there. But, there will be thunder? I am always dubious when it comes to Yahoo and thunder.

As for the homepage, Morse said Yahoo was still evaluating the performance.

2:58 pm: Mobile. Aaaaaghhh, another chance for Morse to say not much about anything substantive. Morse: Better and more established! Translation: No moolah yet!

A head count question. Will improvement come from cost cuts due to the Microsoft deal or revenue improvements?

Three guesses and the first two don’t count. Thanks for the row-boatloads of money, Microsoft!

Something about bookings and small-to-medium businesses. Morse did not understand the question and neither did I.

Next, a question on search monetization, which has weakened. Answer: Stabilization!

3:02 pm: A question about the new $100 million branding campaign. Morse: “It’s very, very early.”

Some deal question and then one about behaviorial targeting, which Morse said will apparently be a “lifeblood” of the future.

Incredibly, Morse has gone hog-wild chatty with Bartz laid low and is asking for more questions, without making one good joke or salty remark yet.

I was completely losing it when it gets to ad exchange details and not as coffee-saturated as I needed to be.

Finally, the LAST question: Another one about divestiture and acquisition.

As if Morse was going to answer, referring instead–as he has many times in the call–to his “script.” Yahoo will buy stuff, Yahoo will sell stuff, but pretty much a no-comment!

And on that note…Carol: Please, pretty please GET WELL SOON!

Until then, here is a minidose of Bartz, via video snippets from an interview with me at the seventh D: All Things Digital conference.

Her lively tone seen here at D7 would have been a good thing at today’s earnings call:

(And, here is a link to Yahoo’s presentation of its financial highlights, for those with a hankering for even more numbers.)

]]> http://allthingsd.com/20091020/liveblogging-yahoo-third-quarter-conference-call-bartz-comes-down-with-something-and-cfo-carries-on/feed/ 1