Share this article

print logo

Yahoo is laying off 2,000, but not here; Firm plans to add jobs in Lockport

Yahoo announced Wednesday that it is laying off 2,000 employees, or about 14 percent of its workforce.

But the grim news contains a bit of a silver lining for the Yahoo facility in the Town of Lockport.

State Sen. George D. Maziarz and David R. Kinyon, Town of Lockport economic development director, received phone calls from David Dibble, Yahoo executive vice president, informing them that Yahoo intends to add jobs at the Lockport data center.

Maziarz said Lockport is one of only two Yahoo locations in the country that will be adding jobs, though he said he wasn't told the number. Yahoo employs 75 people in Lockport now.

Maziarz, R-Newfane, said he didn't know if the additions to the Lockport workforce will be hires or transfers from other Yahoo locations. "I don't think they've decided that yet," he said.

"I think it's great news. They [are] just elated with the quality of the workforce," Town of Lockport Supervisor Marc R. Smith said.

The $180 million complex includes an administration center and five 33,000-square-foot data pods with about 50,000 computers. It serves as Yahoo's East Coast data center.

The Buffalo News reported Feb. 21 that Yahoo was negotiating to buy 14 acres of additional land in the town industrial park that are adjacent to the 30 acres the company bought from the town in 2009.

"I think [closing the deal] may be 60 days away," Smith said. The company paid $15,000 an acre in 2009; Smith said the contract for the new sale is still being negotiated.

In 2009, the town Industrial Development Agency granted Yahoo an 18-year property tax exemption, which included a complete exemption from property taxes for the first 10 years.

Yahoo also received 15 megawatts of reduced-price electricity from the New York Power Authority, enough to power 15,000 average-sized homes. One additional megawatt for the since-completed second phase of the project was approved in 2011.

The value of the tax breaks and utility savings topped $250 million, making Yahoo the most heavily subsidized business in the region's history.

Dibble, the Yahoo vice president, has a connection to Western New York. His family hails from Ellery Center in Chautauqua County.

Yahoo estimated it will save about $375 million annually after the layoffs are completed later this year. The Sunnyvale, Calif.-based company will absorb a pretax charge of $125 million to $145 million to account for severance payments. The charge will reduce Yahoo's earnings in the current quarter.

Workers losing their jobs were being notified Wednesday. Some of the affected employees will stay on for an unspecified period of time to finish various projects, according to Yahoo. The company employed 14,100 before the layoffs.

The housecleaning marks Yahoo's sixth mass layoff in the past four years under three different CEOs. This one, under CEO Scott Thompson, will inflict the deepest cuts yet, eclipsing a cost-cutting spree that laid off 1,500 workers in late 2008 as Yahoo tried to cope with the recession.

The previous purges under Yahoo co-founder Jerry Yang and his successor, Carol Bartz, boosted earnings. But trimming the payroll didn't reverse a revenue slump, which has disillusioned investors seeking growth at a time when more advertising is flowing to the Internet.

The cuts are part of an overhaul aimed at focusing on what Thompson believes are Yahoo's strengths while also trying to address its weaknesses in the increasingly important mobile computing market.

Thompson is betting Yahoo will be able to sell more advertising if it's more astute in the analysis of the personal information that it collects from the roughly 700 million people who visit its website each month.

He is also looking for ways to improve the products the company makes for smartphones and tablet computers, a goal that may require hiring more specialists in mobile technology.

Yahoo also has been exploring selling a service, called Right Media, that helps place ads around the Web. If a deal is reached, that would enable Yahoo to shed even more workers. No further details on the Right Media discussions were provided Wednesday.

Thompson is making his move three months after Yahoo lured him away from a job running eBay Inc.'s online payment service, PayPal.

This report contains material from the Associated Press.

tprohaska@buffnews.com