It's a harrowing time for American corporate employees as companies, beset by the worst financial crisis since the Great Depression and recession staring people in the face, resort to cutting costs, often starting with cost on human capital.
Yahoo, the second biggest search engine company after Google is reportedly cutting more then 1,000 jobs across the board after the first round of 1,000 cuts in January as a cost cutting measure against the bacdrop of the declining US economy that has led to reduced spending on online advertising, with analysts predicting a loss of $6.7 billion in online advertising revenue. forcing Yahoo to adopt hard cost-cutting measures.
According to unconfirmed reports, the Internet company will discuss the scale and timing of the future layoffs, but specific details on the exact jobs to be eliminated will not be disclosed. The Wall Street Journal on Sunday reported that cuts are expected to include all departments, but an exact total wasn't known, although it may exceed the 1,000 expected earlier. Yahoo currently has a headcount of 14,300 after laying off about 1,100 employees in January.
The Sunnyvale company is expected to announce the job cuts after it releases its third quarter financial results today, which according to analysts will be disappointing as they expect sales to rise but earnings to fall up to 9 cents per share. Yahoo has forecasted revenue of between $1.78 billion to $1.98 billion for the third quarter and between $7.35 billion and $7.85 billion for the year.
In its bid to cut costs, Yahoo had hired consulting firm Bain & Co. in September to review its costs and make structural changes. Some Yahoo managers will be asked to cut operating budgets by about 15 per cent.
Google, however, seems to have bucked the trend, with its third quarter 2008 earnings appearing to be recession-proof; the search engine leader registered a 26 per cent rise in profits to $1.35 billion from quarterly revenues, including commissions to advertisers $5.54 billion, a rise of 31 per cent.
Its earnings had grown strongly due to its core online search and advertising businesses.search engine will thrive despite the slowing economy, because its technology can find customers more cheaply than marketing. However, chief executive Eric Schmidt is not sanguine and said that Google, the internet's most profitable company, might not be immune to the fallout from the financial crisis.
Since rejecting Microsoft $47.5 billion takeover offer in May the company has not been able to come with a viable strategy to take it forward and with a worsening global economy the prospects for a Yahoo comeback are looking dimmer and will find it difficult to keep pace with frontrunners Google, MySpace and Facebook.(See: Microsoft withdraws from Yahoo!; shareholders restive with Yang)
Since then Yahoo has been facing pressure to improve performance. Its board had recently fought off a hostile bid to unseat it at the company's annual meeting two months ago after reaching an agreement with leading dissident shareholder Carl Icahn. (See: Yahoo board wins vote of confidence)
In a bid to boost its revenue by $800 million, it tied up with its arch rival Google, to display ads sold by Google along with its search results. But the launch of this venture, which was slated for the beginning of this month is in jeopardy as the US Justice Department investigates whether the alliance would diminish competition in the online ad market. (See: Advertisers opposes Yahoo-Google ad deal; authorities may take antitrust action)
Yahoo has been negotiating with Time Warner about a possible acquisition of AOL for a deal which could cost Yahoo between $8 billion to $10 billion and the structure of the deal would see AOL being a part of Yahoo and Time Warner having a minority stake, in a deal that had been consideredm earlier, as well. (See: Yahoo launches digital advertising platform for old media; rumoured to have revived AOL talks)
Last week, Microsoft CEO Steve Ballmer said a Web-search advertising deal with Yahoo Inc made economic sense and may still be possible, though the two sides are not in any discussions.