Yahoo this morning confirmed that it’s cutting 2,000 jobs, or about 15 percent of its workforce —  part of an effort by new CEO Scott Thompson to make the company “smaller, nimbler, more profitable and better equipped to innovate as fast as our customers and our industry require,” as Yahoo put it in a news release.

As shown in this chart, the move puts the company in stark contrast with the likes of web giants Amazon and Google, which have been growing like crazy in recent years.

After the cuts, Yahoo’s employment will dip to its lowest point in five years, since back before the economic recession.

It’s not clear how the cuts will affect Yahoo’s partnership with Microsoft, which handles the underlying search and advertising technology for Yahoo under the agreement between the companies. Microsoft declined to comment this morning when we asked if it might look to hire some of those cut loose from Yahoo.

Kara Swisher of reports that the Yahoo cuts will hit particularly hard in the company’s product division, headed by former Microsoft executive Blake Irving. Swisher adds, “Irving has reportedly had several incoming job offers, although it is not clear if he has responded to that interest.”

USA Today has the full text of the memo sent by Thompson to Yahoo employees. Here are the three areas in which he says the company will focus.

• Core Media and Communications: Our content, media, and communications experiences must be best in class. That includes getting today’s core properties right and innovating on a next generation of great product experiences across all screens.

• Platforms: We must make our core platforms and systems a genuine strength for Yahoo! – platforms that we can really leverage to support our massive scale, drive the deepest personalization, and boost speed to market.

• Data: Our massive data sets must become a genuine competitive advantage for Yahoo!. We have to unlock the value in our data to allow us to really understand our 700 million users, encourage and win their engagement and trust, leverage everything they do with us to more fully personalize their experiences, and to give our advertisers the immediate insights they are rightfully demanding.

More coverage: Wall Street Journal, Mashable, and ZDNet.

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  • Christopher Budd

    It’s a real shame that, yet again, the people who ultimately pay for bad management are the people in the trenches.

    I think Jerry Yang has secured his place in the business history books as the most delusional CEO in tech (and maybe anywhere). When Ballmer was looking to seriously overpay for Yahoo, Yang somehow thought it still wasn’t enough.

    And now, thanks to Jerry more and more folks are out of work.

    He really was the “Chief Yahoo”.

    • Mark

      Yang made some bad decisions, especially towards the end. He also made many good ones during his tenure, including the very valuable Asian assets he secured. It’s unclear that Ballmer was seriously overpaying. On a sum of the parts basis and at that time, it probably represented a normal takeout premium over fair value. What Ballmer didn’t forsee was the subsequent market and Yahoo specific collapse, but then few did.

      Yang won’t be treated kindly in business history books. But he made a lot fewer mistakes and cost his shareholders a lot less than Ballmer has. The difference is that shareholdes finally got tired of Yang and forced the board to act. Whereas MS’s shareholders have been apathetic.

  • Guest

    Sounds like Yahoo is sprucing up the house prior to putting it up for sale.

  • Guest

    “Aging” seems the be the media word of the week. I’ve seen it applied to Yahoo, Nokia, and Microsoft. Why isn’t Apple aging too? What we really seem to be talking about isn’t age per se, but poor leadership, strategies, execution, and a resulting loss of competitiveness. The latter isn’t necessarily a function of age; we’ve seen relatively new companies lose it and much older ones like Apple regain it. It’s a reflection of leadership.

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