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Yahoo mass job cuts – why now?

Internet search giant Yahoo may not be so giant anymore, as the company has announced plans to cut 2,000 jobs.

The huge cut represents a 14% reduction in its workforce, of which there are 14,100, and is the sixth time the company has had a spring clean in four years.

But it’s not just workers at the bottom who have gone, as the company has gone through three chief executives in the same amount of time.

Biggest Yahoo lay-off yet

But this latest swathe of cuts is the biggest yet, eclipsing the 1,500-worker lay-off in 2008 that Yahoo undertook to stay afloat during the recession.

The company has said the lay-offs will be completed by the end of this year, and estimates it will save around £236 million as a result. But is this the only reason for the job cuts?

Why Yahoo job cuts now?

On the face of it, saving money seems like the only reason for laying off such a large proportion of the workforce. But history tells us this doesn’t always work.

Previous workforce clearouts, by Jerry Yang and then by Carol Bartz, certainly saved some money but did not reverse a revenue slump.

This time around, the job cuts are just the start of a new era for Yahoo, as chief executive Scott Thompson tries to bring the company into the mobile world we now live in.

“Today’s actions are an important next step toward a bold, new Yahoo – smaller, nimbler, more profitable and better equipped to innovate as fast as our customers and our industry require,” Scott Thompson said in a statement.

“Our goal is to get back to our core purpose – putting our users and advertisers first – and we are moving aggressively to achieve that goal.”

Internet firms, no matter how solid they once were, can find themselves on a knife edge in no time. Whether the mass job cuts is enough for Yahoo remains to be seen.