Yahoo to cut its workforce?

Company is contemplating another round of layoffs, fueled by financial prospects that are weakening, according to a Silicon Alley Insider report.

Updated at 2:21 p.m. PDT, with information on Yahoo's stock performance and a letter sent by Sen. Herb Kohl to the head of the antitrust unit for the U.S. Department of Justice.

Yahoo is contemplating another round of layoffs, according to a report in Silicon Alley Insider.

Any carnage count would likely be less than 20 percent of the workforce, SIA notes, citing people familiar with the company's financial health. According to the report:

While our Henry Blodget has called on Yahoo to can 3,018 people (that's more than 20 percent of the workforce), the odds that Yahoo will make cuts on that scale are very low, we're told by people familiar with the company's thinking. But we're also told that another round of layoffs are indeed on the drawing board, prompted by a grim financial forecast.

Yahoo plans to report its third-quarter results on October 21.

Yahoo's stock is already under great pressure, closing Thursday at $15.58 a share, down 8.14 percent over the previous day's close and dropping to a level that hasn't been seen since August 2003.

While the broader markets were also down on Thursday, Yahoo's descent was particularly steeper toward the last hour of trading.

Sen. Herb Kohl, chairman of the congressional subcommittee on antitrust, competition policy and consumer rights, sent a letter Thursday to the head of the antitrust division for the U.S. Department of Justice, requesting a close examination of the controversial Google-Yahoo search advertising partnership be undertaken.

Kohl's antitrust committee held a hearing in mid-July to examine the nonexclusive agreement, which calls for Google to place some of its ads on Yahoo search page results.

In his letter to the Justice Department's antitrust chief Thomas Barnett, Kohl stated:

The parties assert the transaction is in the advertisers' best interests since it will create a more efficient marketplace.

While we have conducted a careful review of this transaction, we do not have the benefit of the confidential business information supplied by the companies to the Department nor the economic models necessary to predict consumer behavior...nonetheless, we conclude that important competition issues are raised by this transaction. Should the amount of advertising outsourced by Yahoo to Google grow significantly, we believe the threat to competition will also increase.

The deal is currently in the final stages of an investigation by the Department of Justice , which will indicate whether it will seek to block the partnership by filing a lawsuit, or allow it proceed with or without remedies.

 

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