Yahoo to Lay Off 5 Percent

Yahoo will lay off approximately 5 percent of its global workforce as part of an aggressive initiative to cut costs. The announcement came as the company reported a year-over-year Q1 net income decline of 78 percent.

In its statement Yahoo said the layoffs would “allow flexibility for accelerated strategic investments and targeted hiring in its core operations.” The majority of affected employees will be notified within two weeks.

Yahoo reported first quarter net income of $118 million on revenue of $1.6 billion. Revenue dropped 13 percent compared with Q1 2008. Revenue from the company’s owned and operated sites declined 10 percent, slightly better than the 16 percent decline it saw in revenue from partner sites.

To some extent those figures mirrored Google’s Q1 earnings report earlier this week. While Google performed much better overall than Yahoo, growing its revenue year-over-year despite the recession, revenues generated by its Web site partners totaled $1.6 billion, a 3 percent drop compared to the year-ago period.

Yahoo’s layoffs this spring will mark its third large-scale workforce reduction in a little over a year. A year ago February the company let go an estimated 1,000 Yahoos, and last December another 1,400, representing approximately 10 percent, were handed pink slips. Based on its current headcount of 13,500, the impending round of cuts should affect roughly 675 people.

CEO Carol Bartz said cost savings generated by the staff cuts and other measures will be reinvested in the company’s core products. She called out nine products she called “imperative”: home page, sports, news, finance, entertainment, mail, search, and mobile.

“I want to be clear this is not the kind of across-the-board cost reduction Yahoo undertook in Q4,” said Bartz. “It is a natural outgrowth of the work we are doing to…streamline our products.”

Separately, Yahoo has hired Jeff Russakow as SVP of customer advocacy. He will lead a new customer advocacy group that aims to make Yahoo more efficient and responsive to advertisers and consumers. The group was created as part of a management overhaul Bartz initiated in February.