Yahoo to Announce Job Cuts

October 20th, 2008 at 12:00 am
 


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Yahoo is setting the stage to announce their third quarter earnings on Tuesday.  However, in the recent months after the collapse of the Microhoo fiasco, Yahoo’s stock has been on a steady slide down and went into a free fall when the financial crisis on Wall Street hit.  So maybe they won’t really be announcing earnings, instead they may be announcing the money they’ll be saving once they lay off a couple of  thousand of their workforce.

It’s not surprising after the behavior of Yahoo’s stock and the current job cuts in Silicon Valley.  Yahoo being one of the largest companies on the internet is still vulnerable to the forces even tech start up are exposed to.  Even with all the experience and money Yahoo’s has generated over the course of their existence, they still carry the same weight (even more) of operational expenses a small tech startup does.  So when the economy fails and business is bad, Yahoo does whatever any company does, downsize, and first to go is the man power.  Simply because machines can operate themselves more cost effectively.  

"The underlying problem is that the Internet companies have large overhead and staff numbers plus a sizable fixed-asset base of server farms and buildings," Jeffrey Lindsay, an analyst with Sanford Bernstein, said. "It will be very difficult for them to cut back and maintain profitability if they leave things too late."

On the other hand, Google is doing quite well during these troubled times.  According to reports, Google has been trimming its contractor workforce while maintaining a steady and slow expansion of their permanent employees.   Ben Schachter of UBS writes, Google is showing discipline, and, dare we say, maturity by keeping its expenses in check."

Then again these are just expectations.  Yahoo’s announcement is still unsaid but with everything that’s going on, there’s a 90% chance of a thousand jobless Yahoos tomorrow.