Yahoo! Restructuring Includes Huge Layoffs

TAMPA, FLORIDA- In a bid to turn around the company, Yahoo! CEO Scott Thompson has announced it will lay off 2,000 workers, or about 14 percent of its workforce.

What this means for search engine optimization remains to be seen. According to Search Engine Journal, the latest market shares (March 2012) for the top three- Google, Yahoo! and Bing- total more than 98 percent of the total search engine market, with Google far outpacing the other two with 77.02 percent. Yahoo! remains in second place with 11.56 percent compared to Bing’s 9.59 percent.

Ali Husayni, Master Google’s CEO, says the changes at Yahoo! shouldn’t affect the search engine optimization business “because Yahoo! is using Bing’s search results and if/when you rank well with Google, you also rank well with Bing, and consequently Yahoo!”

This is the fourth time in six years that Yahoo, Inc. has conducted mass layoffs. Thompson says the move will save the ailing company about $375 million dollars per year. The layoffs are the largest in the company’s 17-year history. The changes also include a reshaping of the board of directors. Thompson is Yahoo’s fourth full-time CEO in less than five years, a period marked by steady declines in revenue.

After announcing the layoffs, Thompson promised to share more details about his plans April 17, when Yahoo Inc. is scheduled to release its quarterly earnings. Standard & Poor’s Capital IQ analyst Scott Kessler says Thompson “definitely seems to be taking a very broad and bold view of what needs to be done at Yahoo!. He seems to know it isn’t going to be easy and it isn’t going to be pleasant.”

A leader of the search engine pack once upon a time, Yahoo! has been overtaken by Google and Facebook in the race for online advertising. Yahoo!’s website remains a popular destination, tracking about 700 million visitors per month, but people have spent less time there and more on Google and Facebook.

On a related Facebook note, Thompson recently launched a series of lawsuits against Facebook. Facebook is firing back with its own counter-suits. Yahoo! claims that Facebook is infringing upon several patents owned by Yahoo!, including patents on methods for advertising online. Facebook’s counter says Yahoo! has violated its patents covering advertising, online recommendations and photo-tagging. Yahoo! has dismissed the new lawsuit, saying it’s without merit.

Thompson sent an email to employees covering the upcoming changes, which in part reads:

Today we are restructuring Yahoo! to give ourselves the opportunity to compete and win in our core business. The changes we’re announcing today will put our customers first, allow us to move fast, and to get stuff done. The outcome of these changes will be a smaller, nimbler, more profitable Yahoo! better equipped to innovate as fast as our customers and our industry require.

Change is never easy. But the time has come to move Yahoo! forward aggressively with increased focus and accountability. Our values have always been about treating all Yahoos with dignity and respect, and today is a day to embrace those values. This is an amazing company with exceptionally talented people and I know we will all do our best to encourage each other through this difficult period of transition.

Yahoo!’s future is uncertain but for now, the company remains a player in Web search, albeit a far distant second to Google.

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