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Yahoo CEO needs to outline his vision after layoffs

Sharon Gaudin | April 5, 2012
As Yahoo laid off about 2,000 employees Wednesday, industry watchers were asking when its CEO will lay out his vision for the struggling company's future.

As Yahoo laid off about 2,000 employees Wednesday, industry watchers were asking when its CEO will lay out his vision for the struggling company's future.

Yahoo began informing employees of the layoffs Wednesday, according to a statement. The company, which is cutting 14% of its work force, expects to save $375 million from this move.

In its statement, the company said: "Through its restructuring efforts, Yahoo intends to grow by responding more quickly to customer needs and competing more effectively in areas where it can win. Yahoo has identified key parts of the business -- a select group of core businesses, the platforms that support those core businesses, and the data that drives deep personalization for users and ROI for advertisers -- where the company will intensify efforts and redeploy resources globally, all focused on increasing shareholder value."

Scott Thompson , Yahoo's new CEO, announced the cuts Wednesday morning. What he didn't say, however, was whether this was the first in a series of cuts, what departments would be hardest hit and if he's working to rebuild the company or preparing it to be sold.

"You need to be clear so you can get the people behind you. It's just showing inexperience," said Rob Enderle, an analyst with the Enderle Group. "At the very least, he needs to articulate a strategy. He needs to lay out a plan, if only to get the employees on board with wherever he's going. He needs to give people some clarity of his vision. He says he's rebuilding something, so he needs to tell people what he's creating."

Enderle added, "You only get away with reshuffling chairs on the Titanic so long. Before too long you have to right the ship."

For weeks, there have been reports that not only layoffs, but a corporate reorganization, were coming for Yahoo, which has fallen out of the top rungs of Internet companies. Last September, former CEO Carol Bartz was ousted from the company. Since then co-founder Jerry Lang and several board members have left as well.

Both Enderle and Patrick Moorhead, an analyst with with Moor Insights & Strategy, said Wednesday's layoff announcement is just the beginning of another round of sweeping changes at Yahoo.

"Companies in crisis like Yahoo are never finished until they start coming out of the woods. These are like earthquakes, with many aftershocks," Moorhead said. "In general, layoffs combined with an inspiring vision and mission would be positive, but I don't see the vision. Layoffs never are a substitute for a strategy and many times layoffs are a token to Wall Street."

That little more is coming from Thompson about his plans, Moorhead said he is inclined to believe that Yahoo is being prepared for sale. "If you don't hear some large ideas with some execution confidence, I would believe they are getting ready for a sale," he said.

 

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