The reorganization plan by Yahoo! Inc. (NASDAQ:YHOO), which is aimed at getting its business back on track is likely to affect 10% of its workforce. The move expected to begin as early as this month will result in a significant layoff of more than 1,000 people and will affect critical operational areas of the tech giant the likes of Yahoo’s media business, European operations, and platforms-technology group.
Reliable sources indicated that the company has been under immense pressure to work on turning around the failed revitalization of the business. One of the investors Starboard Value LP has been calling on the Chief Executive Officer Marissa Mayer and her leadership team to reduce the company’s workforce to create a new path to new business.
At the same time, Yahoo’s stock has continued to suffer, and Starboard, which owns about 0.75% of Yahoo, had threatened to shake up the board if nothing is done. It has also been putting a lot of pressure on the Internet Company to embrace changes that would lead to the separation of its Asian assets and put on public sale its core business.
Some of the Asian assets that the activist investors alongside other shareholders wants Yahoo to separate include stakes in Chinese e-commerce Company Alibaba Group Holding Ltd and Yahoo Japan Corp.
However, Yahoo is resisting and instead choosing to track a tax-free spinoff of the core business. Through the help of management consulting firm McKinsey & Co, the company is also looking at cutting more costs in other areas the likes of scaling back operations at its production studios by restructuring and consolidating it so as to save money on contractors.
Apparently, the presence of the management consulting firm had put the employees on a preparation mood hence the layoffs did not get them by surprise.
In the meantime reports have it that the company has been snooping around for a large parcel of land closer to its Silicon Valley headquarters. However, the snooping plans were for purposes of corporate expansion but from the current unfolding’s there are chances that the snooping will be halt.
As it is now, the full picture of Yahoo is yet to be known until the dust settles down.