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Yahoo Layoffs Begin, CEO Sends Employees Apologetic Letter
redletterdave writes "As expected, Yahoo began laying off more than 2,000 employees on Wednesday morning — roughly 14 percent of the company's total workforce — in its effort to slim down and pivot its focus in a new direction. The mass layoff marks the sixth time in four years — and under three different CEOs, no less — that Yahoo has dumped employees, but this one will the company's biggest in its 17-year history. Scott Thompson, Yahoo's CEO, sent an apologetic letter to all his employees this morning explaining the changes."
Daniel Loeb, the hedge fund manager who is also one of Yahoo's largest shareholders, has launched a new campaign to shake up Yahoo's board even further since being spurned by the company. Loeb has been trying to persuade Yahoo to elect him, as well as three other alternative candidates, as possible directors. If a truce isn't met between Loeb and Thompson, the dispute will be put to a shareholder vote at Yahoo's annual meeting.
So, this "hedge fund" guy (we called them corporate raiders back in my day. They wore an onion on their belt because that was the stye back then ... oh, yeah.) is going to can a shit load of people, reducing the expenses and boosting profits in the short term. Said "hedge fund" guy will then make a killing on his stock, options, and any warrant positions he has and flies back in his corporate jet to the bank.
In the meantime, Yahoo! not having people to actually, I don't know innovate and restructure the company to actually offer unique products will be gone. So, in the long term, Yahoo! will just be an email outsourcer for the likes of AT&T - a nice low margin commodity market.
Yep, if I were Yang et. al., I'd be unloading as fast as I can and spend the rest of my life being a philanthropist.
Nothing good of this will come of it. It never has and never will. "Hedge fund" guys know only one thing: slash and burn.
this is sad, at one time Yahoo was the king, then they lost their direction, didn't read the changing times correctly, made some very bad decisions, got too big and lost focus, luckily we have google now, i'm sure they wont make the same mistakes (cough,...)
I'm a capitalist, but not a 1 percenter, and I say that you can't cut your way to profitability.
How does that affect your prediction?
-- "In order to have power, I must be taken seriously." -Mojo Jojo
No, they mistakenly thought they could buy marketshare by picking up a company on the fast track to irrelevance for the better part for years leading up to the buyout bid.
Yahoo sells off its search engine technology to microsoft to use in Bing, then fires 14% of the company in the pursuit of "pivoting its focus in a new direction."
your entire company was based on searching for shit on the internet; that was your expertise for more than a decade. Sure you have other products like email that are basically indistinguishable from competitors, but you havent hired anyone to replace these workers that would give the public an indication of your intents to focus or pivot on anything but firing more workers and parachuting more execs. at this point the only place left to "pivot" is chapter 11 bankruptcy.
Good people go to bed earlier.
Just out of curiosity, how much money did these CEOs take on their way out?
I mean, they got paid for doing a job of course. And even if they do a bad job of it, they (arguably) deserve a paycheck. But bonuses, severance pay, and perks are hard to justify when letting people go because the business if failing.
Stock options are actually a pretty good idea. If they drive the company into the ground, those aren't worth much.
With the rising costs of "quality" CEO material, were these guys worth the investment?
You write a good post. But you aim at the wrong subject. You should ask yourself: Why does Yahoo find themselves in this position in the first place? (hint: it has something to do with not giving customers what they want)
Strong companies don't have these problems with "hedge fund" guys. Weak ones do. Like nature, american enterprise and the markets can be very cruel. It seems odd to me that you complain when things work the way they are supposed to work. What did you think was supposed to happen when you don't give customers what they want? (ie: you are not successful in the marketplace - for whatever reason).
I'm a capitalist, but not a 1 percenter, and I say that you can't cut your way to profitability.
How does that affect your prediction?
Free market fantasies. You're a capitalist, eh? Too bad it doesn't really exist....anywhere. I hope you don't think anything that's gone on in banking, the oil industry, agriculture, uh...do i need to go on, has anything to do with a capitalist 'free market'. Has a lot more to do with fleecing the tax payer and handing the cash over to companies, who then pretend to be engaging in some kind of free market. What a bunch of bull.
... laying off people allows you to "get stuff done" and "be nimble". To me a company with excess workforce is a lot more likely to be nimble (easy to create ad-hoc teams to pursue new products/things) than a company at capacity where everybody is already fully tasked (where if you have a new project you HAVE to abandon some older project whether or not it makes sense to do so).
The nimbleness of a company is more of a function of how it's managed than of its size, but of course it's a lot easier to spin layoffs by pretending that a smaller company is somehow better performing than a larger one (if that was the case why would companies ever hire? it'd be much simpler to just remain "nimble" by staying small).
-- the cake is a lie
other factors external to the business that result in minor profits for the next three years and the stock returns to its previous low levels
When Rome is burning, it's externalities. When it's growing, it's entirely due to the CEO's guidance. If, after two years, the stock has returned to it's previous state, then the CEO's amazing work wasn't all that amazing.
If they complain about it not being fair, the response is the same as the one they gave during the bust years.
"Well there are externalities"
This wasn't the best example for you to pick, please try again.