With the threat of another acquisition bid from Microsoft, Yahoo is extremely vigilant about profitability. With the delay of the advertising relationship with Google, there is speculation that Yahoo will be eliminating over a thousand staff positions:
“…The internet company could announce the job cuts as soon as tomorrow when it reports its third quarter earnings, according to today’s Wall Street Journal.
Some Yahoo managers will be asked to cut operating budgets by about 15%. The move has been interpreted as a response to a number of factors including the worsening economic crisis hitting online advertising display revenues.”
Initially, such a reduction of staff may be a financial saving for Yahoo. However, it the staff reduction impacts on the quality of the product, the move plays into Microsoft’s acquisition plans. It is becoming crucial for Yahoo to overcome the regulatory hurdles concerning its advertising relationship with Google. Microsoft will be relentless with its acquisition plans – and Yahoo is keenly aware of the threat.