Yahoo CEO Scott Thompson and his thought-bubble. Image via CrunchBase
Yahoo CEO Scott Thompson took some heat recently for laying off 2,000 people without issuing a detailed battle plan explaining why those layoffs were necessary and how they figured into the big picture.
On a call to discuss the company's first-quarter earnings Tuesday, Thompson revealed a little of that picture. After conducting a strategic review, he said, he came to the conclusion that Yahoo's biggest problem was strategic sprawl.
Prior to his arrival in January, he said, "Yahoo had been doing way too much for too long and was only doing a few things really well." The sheer scale of Yahoo's massive audience contributed to the problem: The ability to direct a firehose of new users to every new venture made it seem like they were all succeeding, at least initially. "Each of our products and services may individually generate more engagement than most start-ups...but that does not mean we should continue to do everything we currently do," he said.
Trying to compete on so many fronts had the pernicious effect of diluting the talent Yahoo could throw at the areas that mattered most, he added. "We need to be clearer going forward about what we won't do," he said.
Thompson said that Yahoo will begin by shutting down some 50 properties it deems inessential and consolidating redundant technology platforms. It will refocus its media network around the core areas of sports, news, entertainment and finance. It will be moving more of its engineers into commerce-based businesses, and refocusing its R&D resources on owned-and-operated businesses rather than on platforms that serve outside publishers.
Speaking of commerce, Thompson, a former president of eBay's PayPal, made a rather blatant Freudian slip while addressing all those layoffs. "I don't take the decision to eliminate jobs lightly," he said. "We have thousands of hard working and loyal PayPal -- excuse me, loyal people, here at Yahoo."
