Yahoo! (YHOO) is one of the first widely used internet search engine companies. Yahoo! is currently in the middle of a company-wide reorganization, primarily because its revenue has declined in each of the last four years, from $7.2 billion in 2008, to $4.9 billion in 2011. The main reason that Yahoo!’s revenue has decreased is because it has been hurt by strong competition from Google (GOOG) and the soon to go public Facebook (FB). In an effort to turn the company around Yahoo! hired Scott Thompson as its new CEO in early January. Prior to signing on with Yahoo!, Mr. Thompson served as the president of PayPal’s online payment service.
Mr. Thompson’s job was to turn Yahoo! around, and in early April he began the reorganization by announcing that the company would be to laying off 2,000 of its 14,000 employees, which would amount to 14% of its workforce. Mr. Thompson told the company’s remaining 12,000 employees that he was “revamping the company into three divisions: consumer products, geographic regions, and technology.” The company’s goal would be to take advantage of Yahoo!’s media properties and the wealth of data it has on its users. It was estimated that the layoffs would save the company about $375 million a year. “The company said it expected to record a pretax cash charge of $125 million to $145 million for severance payments, mostly in the second quarter.” It was speculated that Yahoo! needed to reduce its workforce because “The revenue that Yahoo! generated per employee last year was only half the average generated by its peers.To continue reading, click here.