Yahoo (YHOO) finally announced the mass firings that everyone has been writing about for the last few weeks. The company will be reducing its global workforce by “at least 10%,” or 1,500+ employees.
That sounds like a lot…and it is. But it is also almost exactly the same number of employees Yahoo has hired in the past six months.
At the end of Q1, after the last mass firings, Yahoo had 13,800 employees. Now it has 15,200. (See chart below) We have asked around. No one we’ve talked to has any idea what the 1400 employees Yahoo has added so far this year are doing.
We’ve said we think Yahoo should cut its workforce by at least 3,000 employees. This sounds outrageous: 20% of the company! To put that in perspective, however, it would mean reducing the company to the same size it was a little more than a year ago, in Q2 2007, when the economy was screamingly healthy and online advertising was cranking along.
From Q3 last year to Q3 this year, Yahoo’s revenue grew 1%. Its global workforce, meanwhile, grew by 10% (even after it fired 1000 employees). Since the beginning of 2007, Yahoo’s workforce has grown by more than 30%. Its revenue base, meanwhile, has barely increased.
Yahoo is fat. It will still be fat after it lays off 1500 employees. We hope the company does not fall into the death-by-a-thousand cuts trap that has plagued AOL for years. But it certainly seems headed that way.