Finally the beans have been spilled. And it’s official now. Former internet giant Yahoo is axing about 600 jobs, which is about 4% of its total employee’s strength. Already, there have been weeks of speculation on the subject and its here. The company is axing its jobs for a fourth time a row in the last three years in a possible bid to improve its earning potential. Reportedly, within three months of Carol Bartz assuming the charge of CEO, she has cut about 5% of the entire work force apart from shutting down below average websites. A month before her taking the position, the company had already dissolved 10 % of the workforce, which is over and above the 1000 jobs that were axed in early 2008. Altogether some 4000 positions have been done away with.
The cuts, to be coupled with ‘attractive’ severance packages and outplacement services, start today mainly with Yahoo’s product group. And if the opinions of the officials at Yahoo are to be believed, the move is a part of the company’s ongoing strategy to position itself in the best way for revenue growth and margin improvement and also to its strategy to roll out unique and innovative products or services to the market.
There is a trend to watch here. While the Sunnyvale, CA based company is cutting its jobs, its local counterparts such as Facebook, Google and Zynga are on a hiring spree battling out for the best talents in the market. And so far, Yahoo has also been experiencing slow online advertising growth and low user engagement rate. Though it still is a popular web destination, it surely is facing stiff competition from the said counterparts. Yahoo considers Facebook as its main rival in online advertisement arena ever since the Mark Zuckerberg founded company bypassed it as the top seller of online display advertisements in the U.S. just a year ago, according to ComScore.
Carol Bartz still believes that her company has made substantial progress this year in terms of execution of strategies for enhancing profitability and resuming revenue growth. Citing the example of Apple’s Steve Jobs, who took four years to reinvent the Apple brand after his return in 1990s, Ms. Bartz said that she certainly needs some more time to come out of the present issues. The shares of the company closed seven percents lower at $16.63 on NASDAQ.
However, Rob Enderle, Analyst, Enderle Group, believes that layoffs are not the best solution to come out of the issues. He said that Yahoo board members need to bring in another capable CEO or to sell the company to those like Microsoft, Google, Facebook and AOL who can run it better.
Adding woes to Yahoo’s daily routine were yesterday’s issue of its search engine being hacked for a while. The image results thumbnails were reportedly linking to some pornographic sites, which made the team a little more panic and overwhelmed. However, the issue was fixed at opportune time and everything seems normal now. What a bad omen for Yahoo?
On the other hand, the world’s top mobile phones manufacturing company by volume Nokia is also considering axing about 1800 jobs worldwide, according to an STT News Agencies report. The company may indeed be preparing for a life beyond its classic Symbian OS and is streamlining its workforce as well. Somehow, the company is lagging behind the race of smartphones where Google’s Android and Apple’s iOS, seem to have ruled the roost. Its recent release N8, which is based on Symbian, is also not quite a successful as a model. Moreover, there have been various criticisms on the Finnish mobile giant for its deadlines issues and technical faults in devices among others.
And the latest one is the postponement of the release date of its much anticipated E7 phone. The model was slated for release on 10th December, but that has been put off to “Early” next year. Possibly, the company may have gained some insights and is now considering improving its plans to roll out four to five Symbian OS updates that will certainly enhance the home screen and the UI of the not-so-popular mobile OS now. And if not the best, there could certainly be a big deal of improvement in these areas.
Our Take
These holidays of Christmas and New Year won’t certainly be the best for these two companies that were once leaders in their own respective spaces. But why have they lost their sheen with the passage of time? Have not they evolved with time or are their technologies not in tune with the present ones? Well, that does not seem to have happened because their R&D activities keep happening. Perhaps Yahoo is the company which originally has sown the seeds of social networking with its classic mail and messenger services. How come Facebook is ruling the game today? No doubt it still has the potential and reputation, but it should also certainly identify the areas where it is lagging behind these newcomers. Same goes for Nokia too. Why can’t it make an OS that has ruled the market for many years more attractive and useful? It certainly needs to put on its thinking cap again.
What is your take on this trend? Let us know.
