Yahoo Lays Off 2,000 Employees

Yahoo has confirmed a report [1] by AllThingsD’s Kara Swisher published Tuesday that the company would begin laying off roughly 2,000 employees today (April 4).

The company's recently installed CEO Scott Thompson said in a statement that layoffs are part of an effort to build a company that’s “smaller, nimbler, more profitable and better equipped to innovate as fast as our customers and our industry require.

“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,” he continued. According to an email Thompson sent employees that has been obtained by several [2] media [3] outlets [4], the idea is to focus Yahoo around three core businesses: core media and communication, platforms and data.

Yahoo is projecting the layoffs will save the company $375 million after all affected employees are transitioned, but it will take a $125 million-$145 million pretax hit in its second quarter earnings as a result of the severance packages it will be doling out.

The layoffs are the latest in a series of lowlights to occur since Thompson took over as CEO three months ago. Within weeks of announcing Thompson’s hiring, company co-founder Jerry Yang resigned from Yahoo’s board. Soon afterward, four more board members, including chairman Roy Bostock, declared they would not seek re-election.

In rebooting its board, Yahoo has found itself into the beginnings of a proxy fight with its largest independent shareholder Third Point. The hedge fund is urging Yahoo to fill its board vacancies with media types like former NBC president and CEO Jeff Zucker and former MTV Network president and COO Michael Wolf, as well as Daniel Loeb, who runs Third Point. According to a Yahoo statement, the company was open to Third Point’s nomination of MAEVA Group chairman and CEO Harry Wilson and one other mutually agreed upon nominee, but Yahoo said Loeb turned down the proposal.

While the board battle has stretched on, Yahoo has also initiated a patent war with Facebook. Last month Yahoo filed a lawsuit against the social network, claiming that Facebook has infringed on 10 patents owned by Yahoo related to online advertising, content personalization, user interactions and privacy. Many in the media and technology industries have lambasted Yahoo for what one former Yahoo employee termed [5] “litigation as a business model.” Yesterday Facebook shot back with a lawsuit of its own. According to a copy of the counterclaim TechCrunch has posted online [6], Facebook is claiming that Yahoo has infringed on 10 of Facebook’s patents related to online advertising, content personalization and privacy.