Yahoo’s (NASDAQ:YHOO) problems are just getting bigger, with the company mulling up to 1,000 job cuts.  The company has consistently lost market share in both search and display ad markets owing to Google (NASDAQ:GOOG) and Facebook, and the layoffs seem to be part of CEO Scott Thompson’s desperate attempt to control costs and turn around the once Internet darling.
Layoffs Necessary For a Turnaround?
The 1,000 layoffs, if they happen, would comprise almost 7% of Yahoo’s total workforce. However, in retrospect, a move like this was fairly expected as part of Thompson’s turn-around process. Weak businesses within Yahoo are bound to be overhauled or cut our entirely, especially as the company shifts its focus to mobile and social tools.
Additionally, Yahoo is already facing defections as high level engineers and business unit leaders are leaving the firm, something we discussed in Will a Brain Drain Hinder Yahoo’s Recovery?
We have a revised price estimate of $18 for Yahoo’s stock, which is roughly 25% above the current market price.Notes: