Citing unnamed sources, the Dow Jones-owned news site said the changes could come as soon as this month.
The report said that the layoffs would mostly affect Yahoo’s large products organisation, along with its public relations and marketing and research operations. Marginal businesses and weaker regional groups could also be affected, the report said.
“I wouldn’t be surprised to see Yahoo lay off thousands,” said Dan Olds, an analyst at Gabriel Consulting Group.
“Reading the tea leaves, I think that there’s a plan in place to focus Yahoo more on gathering, analysing, and making money off of user data rather than their traditional portal content and media serving,” he added.
Analysts and industry observers wondered whether Yahoo is cutting costs in an effort to attract buyers for the beleagured firm, or its new executive team is looking to rebuild.
“It’s possible that the goal here is simply to slim the company to make it more attractive to a buyer,” said Olds.
“I think that they’re going to at least try to turn the company around before putting it up on the block wholesale. However, if the right offer came along, they’d listen intently,” he added.
Yahoo, an Internet pioneer that has slipped in recent years to second-rate status, has been in a state of flux in recent months.
The latest upheaval began last September when Carol Bartz was pushed out of the CEO seat. That prompted rumors that Microsoft and Google were both making moves to buy Yahoo.
Yahoo early this year hired Scott Thompson , a former president of eBay’s PayPal unit, to replace Bartz.
Yahoo co-founder Jerry Yang left the company shortly thereafter and was followed out the door last month by board chairman Roy Bostock and three other directors .