All products featured on WIRED are independently selected by our editors. However, we may receive compensation from retailers and/or from purchases of products through these links.
It was somewhat miraculous: Yahoo delivered third-quarter earnings that landed squarely in line with Wall Street estimates, despite a dramatic slowdown in the display ad market; a delayed search deal with Google; and a global financial crisis.
The company posted third-quarter earnings of 9 cents per share (excluding stock option expenses), hitting the consensus Wall Street view, right on the nose.
"The remarkable thing was that there wasn't really a downside surprise," says Bernstein Research analyst Jeffrey Lindsay. "They gave [poor financial forecasts], but unlike eBay, they managed to deliver earnings within it."
In anticipation of a rotten year, the company said it will reduce headcount by 10 percent in the fourth quarter. This is
Yahoo's second round of layoffs this year; in February, the company issued pink slips to an estimated 1,000 employees.
Many Wall Street analysts said -- at the time -- that the cuts were insufficient and that Yahoo would likely have to cut more jobs at a later date.
This time around, there's some hope that a) Yahoo will actually follow through on its plan, and b) that the layoffs will eliminate some of the bureaucratic, money-sucking middle managers.
"The last time, it was a bit silly. I'm not sure if they even cut the 1,000 jobs they were supposed to. And 600 were probably hired back within the next few weeks. This time, if it's real, we're hoping that they take out middle management," says Lindsay. "We'd like to see
Yahoo keep the younger and more productive members of staff. When a company gets this big, there are too many people who have veto power and nothing gets done. If these cuts get done by Christmas, we think it will be very good for Yahoo."
The cost-cutting plan is also meant to make up for the bungled Microsoft deal. During Tuesday's conference call, one disgruntled analyst pointed out that since Yahoo rejected the $31 per share offer, shares have plummeted. Did management have any plans to unlock shareholder value, he wondered. CEO Jerry Yang (above, left) pointed to the cost cutting plan.
"It was a total fudge," says Lindsay. "Obviously, it's immensely embarrassing that they turned down that offer. This is probably the worst scenario that could have happened to them after deciding to go it alone. We thought 2009 would be a hard year, but who would have though there would be this level of market catastrophe?"
Photo: Flickr/Yodel Anecdotal
