Yahoo product division hardest hit, report says

April 4, 2012

With 2,000 layoffs set to go at Yahoo, the company’s new chief executive, Scott Thompson, is clearly taking his promise to change things in Sunnyvale, Calif., seriously.

In a statement announcing the elimination of 14 percent of the tech giant’s work force, Thompson said that the moves reflect the goal of “intensifying our efforts in our core business and redeploying resources to our most urgent priorities.”

According to a report from All Things Digital, those priorities are moving away from the company’s product division. Yahoo’s statement indicated that layoffs will be spread throughout the company, but the report indicates that most of the layoffs are going to come from the product team at Yahoo.

Reorganization of the product team has been in the works for a while, and the company set several products — such as Delicious, AltaVista and My Blog Log — aside to be “sunset” in December 2010, long before Thompson got to the company. But he has made it clear that he will continue to look critically at the product side of the business.

All Things Digital’s Kara Swisher had previously reported that Thompson had asked the product team why they hadn’t come up with the ideas at the heart of start-ups such as Pinterest and Instagram. A report on the same meeting from Business Insider went further, with unnamed sources telling the publication that Thompson “trashed” the product team.

In a statement, Yahoo spokeswoman Dana Lengkeek said the company isn’t providing information on how the layoffs will fall. “The 2,000 number is a global number and we are not providing a breakout by location or function,” she said.

According to the company’s release, the restructuring is expected to save about $375 million. Yahoo stock went up on news of the restructuring, to a daily high of $15.32, but then fell below its opening price in afternoon trading. As of 1:30 p.m. Eastern, the stock was hovering around $15.05 a share.

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Hayley Tsukayama covers consumer technology for The Washington Post.
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