How does Yahoo get off the cutting-to-greatness treadmill?
Over the last few years and under three CEOs, Yahoo has laid off thousands and restructured its operations in hopes of returning to its former glory. The latest downsizing won't likely bring that glory back.
Yahoo has a persistent dilemma. It's a company with a dozen top Web destinations, unique programming, and 700 million users (and lots of data about them). Yet despite those enviable assets, turmoil repeatedly has plagued Yahoo's recent history.
A brand once synonymous with the Internet for the masses has fallen into decline while giant Internet companies like Google, Facebook, and Twitter, born long after Yahoo, now roam the planet carving up the most valuable territories between them.
To be sure, Yahoo still makes money, but those profits have been getting smaller over the years. The comparison becomes that much starker when measured against the performance of Yahoo's chief rivals.
This latest layoff, deleting 2,000 people from its ranks and saving $375 million in costs, is the sixth downsizing in the last six years. The workforce reductions that took place under Jerry Yang and Carol Bartz have not led to greater glory. Current CEO Scott Thompson says he is making Yahoo smaller to be stronger, but there is no indication that he will fare much better than his predecessors in returning the legendary company to its former glory.
It's not that Yahoo is toxic or incapable of developing great products, or that the company doesn't need to downsize. But when a company is repeatedly laying off people, struggling for focus and appearing to lack a winning strategy, it becomes far more difficult to recruit top talent, which is the currency that allows the leading companies to thrive while others fall behind.
According to All Things Digital's Kara Swisher, Thompson is a practitioner of tough love. She wrote that just prior to the layoff announcement Wednesday, the CEO berated Yahoo executives extensively for their failures and bringing the company to "this sorry point."
Thompson's strategy for getting beyond the sorry point, besides suing Facebook for billions and changing out the board of directors, is similar to his predecessors. In a memo to employees Wednesday, Thompson echoed previous administration with corporate-speak:
"We are intensifying our efforts on our core businesses and redeploying resources to our most urgent priorities. Our goal is to get back to our core purpose -- putting our users and advertisers first -- and we are moving aggressively to achieve that goal."
How will Thompson get off the treadmill worn well by his predecessors? He is using the same downsizing and will make a bold, new Yahoo recipe. Will this time be different? It doesn't appear that massive amounts of advertising dollars or billions of Internet users can be herded in Yahoo's direction.
Maybe Thompson has a secret formula beyond build better user experiences across all platforms, squeeze more revenue per visitor to the Yahoo sites; and get more share of ad dollars.
Thompson will be considered successful if he can make the company, or parts of the company, attractive enough financially to be acquired for a sum that would satisfy shareholders still irate at Jerry Yang and his board of directors for rejecting Microsoft's $31-per-share buyout offer in 2008.
Yahoo's stock price closed up 9 cents (0.59 percent) to $15.27 following the layoff announcement.