Yahoo Inc, owner of the most-visited US Web site, will cut about 700 jobs, or 5 percent of its workforce, as it reorganizes to compete with Google Inc, according to a source with knowledge of the plans.
The company may announce the reductions to its staff of about 14,000 around the same time as it reports earnings on Jan. 29, said the source, who declined to be identified because the cuts haven't been disclosed.
Yahoo spokeswoman May Petry declined to comment. In a statement yesterday, the company said it would "eliminate some areas of the business."
Yahoo has reported seven straight quarters of declining profit as it lost Internet-search users to Google and faced competition from new rivals such as Facebook Inc and News Corp's MySpace. Yahoo chief executive officer Jerry Yang (楊致遠) began a reorganization after taking over from Terry Semel in June.
"The headcount went up without a clear sense of what the company was," said Mike McGuire, an analyst with Gartner Inc in San Jose, California. "A lot of Wall Street was taking Yang at his word when he said they were going to look at everything."
Henry Blodget, a former Merrill Lynch & Co analyst, said on his Silicon Alley Insider blog on Saturday that Yahoo may cut 1,500 to 2,500 jobs.
Yahoo fell US$0.44 to US$20.78 on Friday in NASDAQ Stock Market trading. The stock has fallen 11 percent this year.
"Yahoo plans to invest in some areas, reduce emphasis in others, and eliminate some areas of the business that don't support the company's priorities," a company statement said.
In July, Yang told investors he would spend the next 100 days reviewing the company's business units and crafting a plan to "dramatically improve" performance.
Yahoo's sales rose 12 percent to US$1.77 billion in the third quarter, compared with a 19 percent gain a year earlier. Sales at Mountain View, California-based Google gained 57 percent to US$4.23 billion.
To close the gap with Google, Yahoo upgraded its search engine last year to include videos and Flickr photos in query results. This month, the company introduced an upgraded home page for mobile phones and said it would offer software to help outside developers build applications for handsets.
In an internal memo leaked to the Wall Street Journal more than a year ago, Yahoo executive Brad Garlinghouse recommended cutting staff by as much as 20 percent. The memo, called "The Peanut Butter Manifesto," said too many employees had overlapping responsibilities.
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