These could be the deepest cuts yet, with a strategic eye on which products and services are growing and which ones are a drag on profits. That could put research, marketing and public relations staff in the crosshairs.
CEO Scott Thompson hasn't wasted time to start a comprehensive restructuring of the troubled company. In only two months, he has shaken up the board of directors and hired consultants to review its operations. However, analysts say not to read too much into the layoffs as a roadmap to Yahoo's future.
"It doesn't necessarily give us a clear picture yet of what he plans to do; that has to come when he meets the shareholders or gives a specific kind of interview where he explains his vision for a new yahoo," Tim Bajarin, of Creative Strategies, said.
Thousands of layoffs two or three years ago would have been dismal. Today, however, Silicon Valley tech companies are competing to snap up employees.
"In the past year, we've gone from a 9.8 to an 8.3 percent unemployment rate," Silicon Valley Leadership Group CEO Carl Guardino said. "If you have a college degree in any subject and are at least 25 years old, unemployment rate here is 4 percent. If you have an electrical engineering degree, the unemployment rate is 1 percent."
Yahoo acknowledged in a statement that changes are coming, saying, "Our leadership is engaged in a process that will generate significant strategic change at Yahoo, but final decisions have not yet been made."
Between the threat of layoffs and years of leadership uncertainty, Yahoo has already lost key employees to other companies. It has seen revenues decline for the past three years.
The layoffs could occur by the end of the month, making this an unsettling time for Yahoo's 14,000 employees.