Speculation has grown that the only effective way for Yahoo!’s (NASDAQ: YHOO) new CEO to improve the company’s prospects on Wall St. is to make another large round of employee cuts. In many analysts’ opinions, the portal company still has too many people. The Wall Street Journal made this analysis:
Excluding contractors, 2011 revenue per average employee was $1.4 million at Facebook and $1 million at Google. At Yahoo, it was $316,000.
Because Yahoo!’s revenue problems may take years to solve, even with the engineering and product skills of chief executive Marissa Mayer, she has very few ways to impress investors short term. Among these would be a sale of either Yahoo!’s position in China e-commerce firm Alibaba or in the U.S. company’s shares in Yahoo! Japan. Neither alters the fact that Yahoo!’s core advertising business is in trouble. The temptation to balance that may well be through another round of firings — something that most of Mayer’s predecessors have done already.
Douglas A. McIntyre