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Yahoo Preps for Layoffs

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Yahoo Preps for Layoffs

Business

Yahoo Preps for Layoffs

Yahoo Preps for Layoffs

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The search engine says pink slips are coming for 1,000 workers. Owen Thomas, editor of the blog Valleywag, takes a hard look at Yahoo's hard times.

ALISON STEWART, host:

This week, Yahoo's CEO, Jerry Yang, announced the, quote, "reallocation of 1,000 employees." But the company's CFO clarified that about 1,000 Yahooites will be let go in mid-February. That's 7 percent of the Yahoo workforce.

Now, Yahoo's fourth quarter net income fell by 23 percent compared to the same time last year. Yet, the company still made $1.4 billion in the last quarter. Ten years ago, Yahoo had a reason for the exclamation point at the end of its name. In 2008, it's more like a comma, a pause to figure out what's next by looking at what's happened in the past.

Valleywag.com editor Owen Thomas joins us.

Hi, Owen.

Mr. OWEN THOMAS (Editor, Valleywag.com): Hey. Thanks for having me, Alison.

STEWART: Thanks for joining us. So let's start with these reallocation/layoffs the semantics of it all. Now, who's getting laid off? Who's getting re-assigned? What's going on?

Mr. THOMAS: Well, it's still not very clear. And I think that's very frustrating for both people inside the company and outside. Yahoo can't come out and say the word lay off. They say reduced, redeploy, reallocate, re-assign. And they don't seem to have decided where exactly they're going to make the cuts. If anything - what I hear is that Yahoo is really avoiding making the hard decisions that they need to make. Jerry Yang can't bear to cut any specific projects, so he was just saying let's cut across the board which means the good and the bad. And there's a lot of good inside Yahoo.

STEWART: So what's good inside Yahoo right now?

Mr. THOMAS: Well, you know, definitely, you've got sites like Flickr. Flickr is the leading photo-sharing site. In fact, Yahoo bought it and killed off their own photo site, you know, to let Flickr grow and prosper.

Yahoo has a lot of great, great properties. They've got a ton of loyal users. They've got, you know, they've got mail. They've got their own search which is, you know, obviously, not as popular as Google but it seems to be a fair match. They have a ton of news, finance, sports properties all doing well. But they've got all these side projects. They've got all these countries they're in where they have a presence. They - you know, they don't seem to have any kind of central management, really, giving direction on what's successful and what's not. What should be let prosper and what needs to be cut off.

STEWART: From your readers and folks who'd comment on your site, how is the morale at Yahoo right now?

Mr. THOMAS: It is in the toilet. I mean, there's just no polite way to put it. It's terrible. You know, people - there are a ton of good people at Yahoo. There are a ton of good projects at Yahoo and they just tend to get buried in the bureaucracy and the noise and all the distractions that are going on there. You know, with this layoff, people were hoping that Yahoo would pare off a lot of the bad stuff. But, instead, it seems like they're going to just, you know, throw the baby out with the bath water in a lot of cases and cut things that shouldn't be cut.

STEWART: Let's talk about the management because there's been some interesting - shiftings of the guard in the past few years. The current CEO, Jerry Yang, now he's the original founder of Yahoo. Now, he's back in the saddle. For how long has he been back being CEO?

Mr. THOMAS: It's been less than a year since the, quote, unquote, "retirement" of the former CEO, Terry Semel. And, you know, everyone talks about they love Jerry, how they're so inspired that the founder has come back. But he hasn't really proven himself as a strong CEO and I think that's what Yahoo really needs, someone who people, you know, don't just admire for their past achievements but who they listen to and take direction from.

STEWART: Now, what happened to his predecessor Terry Semel? A lot of people recognize the name. He was the former head I believe it was Warner Brother or Pixars. Now, he was considered to have done a pretty great job six or seven years ago.

Mr. THOMAS: Absolutely. You know, there's kind of the good part of Terry Semel's reign and the bad part. Yahoo was on the ropes, you know? It was in a situation much like it is now, but that was during the dot-com buzz. And, you know, Terry Semel came in. He figured out how to get Yahoo talking to big brand advertisers who didn't disappear like all the (unintelligible) to advertise on Yahoo, getting them into subscription business, their partnership now with AT&T for broadband and dialup subscriptions. Giving them into, you know, into search, I mean…

STEWART: Mm-hmm.

Mr. THOMAS: …Yahoo was not even a search engine before Terry Semel came in. They actually partnered with Google way back when for their search results. And Terry Semel said this was a business that Yahoo needed to own itself, not let someone else run.

STEWART: So what happen? When did Yahoo kind of hit a wall?

Mr. THOMAS: Well, I think it was in 2006, you know? It wasn't really visible the way it's been in the past year. But they took way to long to integrate their search acquisitions and that kind of caught up with them in 2006. And, really, it was, you know, in the absence of Google, they might have done quite a bit.

Google was doing so well and moving so fast, you know, recruiting employees, taking away advertisers, taking away search market share that really knocked Yahoo for a loop. And I don't think they've ever recovered. And, you know, it's not like Google really set out to, you know, to pound Yahoo, but they, you know, Google just ran their business really well and Yahoo was not running it as well and it became really, really obvious.

STEWART: Hmm… We're talking to Owen Thomas from Valleywag.com. He keeps his eye on everything at Silicon Valley.

When was Yahoo had its heyday and why?

Mr. THOMAS: I mean, I would say Yahoo seemed unstoppable in, like '98 and '99. Very few large media companies have figured out online advertising and, you know, Yahoo just dominated that space. They destroyed their competition. You know, Yahoo was the unstoppable one in the late '90s. You know, there are companies which we really don't talk about anymore or which are gone altogether - Excite, Lycos, Infoseek. These are also competitors, which Yahoo handily knocked off.

You know, and then I'd say also Yahoo had a heyday after the dot-com bust. They were a survivor. They really figured out how to, you know, how to make a living in the post-bubble environment. You know, they had a good run, I'd say, in the first half of this decade. Even, you know, especially under Terry Semel. But it's, you know, it's after 2005 that things really seemed to have fallen apart.

STEWART: Owen Thomas is the editor for the Silicone Valley blog - valleywag.com.

Thanks, Owen.

Mr. THOMAS: My pleasure.

WOLFF: Coming right up on THE BRYANT PARK PROJECT, singer-songwriter Jack Johnson goes electric. But first, he talks to Alison Stewart and plays us a song, next coming up on THE BRYANT PARK PROJECT from NPR News.

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