Yahoo Begins Layoffs of 2,000 Employees

Company expects to save $375M annually

As expected, Yahoo! began laying off 2,000 of its nearly 14,000 employees Wednesday, as CEO Scott Thompson said the company was trying "to get back to our core purpose — putting our users and advertisers first."

The company said it expected to save about $375 million annually once the layoffs were complete, after spending $125 to $145 million in pretax cash on severance.

The layoffs were one of Thompson's first big moves since he was named as the company's new chief in January. He said Wednesday that he hoped to make the company, which has nearly 700 million users and thousands of advertisers, "smaller, nimbler, more profitable and better equipped to innovate as fast as our customers and our industry require."

"We are intensifying our efforts on our core businesses and redeploying resources to our most urgent priorities. 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," he said. "Unfortunately, reaching that goal requires the tough decision to eliminate positions. We deeply value our people and all they've contributed to Yahoo!."

The layoffs were first reported Tuesday by AllThingsD

They come as Yahoo's search partnership with Microsoft is not working out as well as the company had hoped, and as Thompson attempts a major reorganization. Yahoo also has been losing ground in advertising to the dominant Google and, to a lesser extent, the ascendant Facebook.

Thompson is also pursuing a patents lawsuit against Facebook and facing serious unrest from his shareholders.