Last updated: December 14, 2010 9:34 pm

Yahoo embarks on fresh jobs cull

Yahoo is cutting about 4 per cent of its workforce in the second big round of layoffs under Carol Bartz, chief executive, who is continuing to streamline operations as revenue stagnates.

The Silicon Valley web content company began notifying affected employees on Tuesday. With staff numbering 14,100 at the last count, the reduction means about 560 people will lose their jobs.

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Ms Bartz laid off a similar number a few months after she joined Yahoo in January 2009, saying towards the end of that year that no more job cuts were planned.

Since then, though, the economic recovery has failed to lift Yahoo as much as its competitors in terms of internet advertising. Yahoo’s total revenues have come in at $1.6bn for each of the past three-quarters.

The reductions are in stark contrast to the behaviour of Yahoo’s Northern California rivals. Google recently announced cash bonuses and a 10 per cent pay increase for all employees, and other groups are bidding fiercely to recruit and retain key talent in areas of expertise such as wireless technology.

While online ad spending is growing overall, Yahoo’s share of the market is in decline. In display ads, where the company is strongest, it will have about 16.2 per cent of the US market in 2010, according to eMarketer, down from 16.5 per cent in 2009.

Meanwhile, rivals are booming. Facebook is projected to have a 9.4 per cent share of the US market this year, from 6.6 per cent last year. Google, which already dominates search-based text ads, is expected to increase its share to 6.7 per cent in 2010 from 4.7 per cent in 2009.

A basic problem for Yahoo has been the declining amount of time most users stay on its pages and view ads. The audience is shifting to social networks and more interactive services, including Facebook and Twitter.

Ms Bartz has responded by outsourcing automated search results to Microsoft and by trying to build the brand in emerging markets, where it is cheaper to operate and brand loyalty can be established early on, with big potential for growth. Internally, she has overhauled the disparate technology platforms on which Yahoo’s popular news, finance, sports and other pages operated in various markets.

The company says it will continue to hire in newer priority areas, including mobile services, locally-tailored content and additional social capabilities.

In a statement, the company said: “Today’s personnel changes are part of our ongoing strategy to best position Yahoo for revenue growth and margin expansion and to support our strategy to deliver differentiated products to the marketplace.”

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