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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.
We need a new law governing layoffs.
If layoffs are about restructuring a company so it can better respond to the market and so it can be profitable, we need some new conditions to ensure that not only are layoffs necessary, but that they're structured to effect long term growth and stability.
In the event of a layoff:
1) executive pay increases are frozen and executive pay is limited to no more than three times the median company salary (excluding executive pay).
2) stock grants to executives are suspended for a period of one year following the layoff.
3) stock vesting is suspended for two years following the layoff.
4) executive bonuses are suspended for a period of two years following the layoff.
5) any new layoff resets the clock.
This way executive compensation is disconnected from any short-term gains or profits realized from a slash and burn strategy. If they want to reap big rewards they have to manage the long term growth of the company.
but I know that's just a pipe dream. no law will ever be passed and you know they're not going to vote this on themselves.
... 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
Normally you would be right.. but Yahoo isn't a weak company. It just hasn't kept up with Google.
http://finance.yahoo.com/q/ks?s=YHOO+Key+Statistics
5 billion in revenue
1 billion in net income
2 billion in cash (1.3 billion in operating cash flow)
no debt
They have a problem with falling revenues, and as a result, falling profits. Their profits declined 5.3% yoy -- so instead of 1.10 billion, they only made 1.05 billion.
Yahoo has the resources to build their company.. they just don't have a vision. And this guy... he doesn't have a vision either.
He is slashing and burning... he is not going to lead Yahoo anywhere.. he's just destroying the company further.