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It may be a sign of the cruel mentality of the American stock trader, but generally news of layoffs drives the share price of the company making the cuts upward.

Word came out this morning that Circuit City (CC) might fire almost everyone who works at the troubled retailer. The stock moved up 17% to $.46 on heavy volume. A stock which is that cheap may not count toward the sample.

At the other extreme is Yahoo! (YHOO). Several media sources said it is about to make significant cuts.

Estimates on the hit that Yahoo!’s expenses will take runs from 1,000 to 3,000 people. By some accounts the portal firm will take out 15% of its entire cost base.

The market does not appear to care. Yahoo!’s shares are down over 2% to $12.53, not much above the stock’s 52-week low.

Wall St. is nervous about Yahoo!’s prospects whether it cuts costs or not. The online display advertising market, which grew rapidly for the last five years, has lost almost all of its steam. The analyst consensus is that Yahoo! will report a decline in EPS when it releases numbers this week, falling from $.11 a share last year to $.09 for the most recent period. Revenue is expected to be up only 7% to $1.37 billion.

Yahoo! is nearly a perfect proxy for the state of display advertising. It runs more of the stuff than any company in the world and that is why that market is so troubled. Yahoo! may announced that its revenue, which is expected to grow 8% next quarter may be close to flat. eBay (EBAY) recently said that it would have no topline improvement from Q3 to Q4. Yahoo!’s position may not be much better.

Yahoo! is no longer a growth company. It is relying on a partnership with Google (GOOG) to improve its revenue from search results, but the Justice Department may kill that.

The market has deserted Yahoo! because the company has nowhere to turn. That does not leave it many options, at least not if nowhere is where it was left the last time anyone looked.

Douglas A. McIntyre