Yahoo announces 1,500 job losses

Yahoo is to axe around 1,500 jobs, which represents about 10% of its workforce, in a bid to cut costs. It is the second time in nine months the group has announced major job cuts.

The internet group, which is based in Sunnyvale, California, blamed the economic downturn after it said net profit for the third quarter of 2008 totalled $54.3 million (£32.5 million), compared with $151.3 million for the same period in 2007.

The company’s results were worse than analyst’s expectations and it has been unable to compete with other companies such as Google, MySpace and Facebook as advertisers cut back on spending.

Just last week Google, which is the world’s largest internet company, announced a 26% increase in profits in the third quarter due to a cost-cutting programme and strong advertising revenue.

Google, which is the internet’s most profitable company, exceeded analysts’ expectations by earning $1.35 billion (£778 million) during the quarter while quarterly revenue, including commissions to affiliated advertisers, increased 31% to $5.54 billion.

Earlier this year, Yahoo rejected a takeover offer from Microsoft, however, an agreement was never reached. A tie-up of the two companies would have helped them compete more effectively with Google.

According to analysts, with falling profits and major job losses, investors could be angry that Yahoo rejected Microsoft’s $47.5 billion offer.

Yahoo’s share price has lost over 40% in the last three months alone. However, in after-hours trading on Monday, shares rose 7% to US$12.58.

In related news, eBay, the online auction website, announced earlier this month that it was to axe 1,000 jobs - approximately 10% of its workforce.

Story link: Yahoo announces 1,500 job losses