Digg not digging the economy, cuts 10 percent

Popular news aggregator Digg is laying off 10 percent of its 75 person workforce. Chief executive Jay Adelson announced a “headcount reduction in certain areas” this morning on the company blog and gave the 10 percent estimate to Webware’s Rafe Needleman.

It seems a bit disingenuous for Adelson to call the cuts “microscopic in size,” but they certainly don’t sound catastrophic. Digg is hardly alone in feeling the effects of the economic downturn. Just today, we’ve also got Sun laying of 1,300 workers and Microsoft cutting 1,400, with thousands more layoffs coming at both companies in the next few months. Digg is refocusing to get on an “aggressive path to profitability” and will still be making hires as well as creating a direct sales team, Adelson writes. The San Francisco startup will also be adding new features, building on its “successful partnership with Microsoft” (where Microsoft sells ads on Digg), and more.

Last year, there were big rumors that Digg was looking to sell to either Google or Microsoft. With Adelson’s remarks about Microsoft, it’s tempting to wonder if that’s still a possibility, but Microsoft’s cuts, plus the fact that Digg is hiring its own sales team, makes such a move seem less likely. The situation might change if Digg doesn’t hit its profitability goals.

Hitwise also recently released a report on Twitter’s U.S. traffic passing Digg’s, but data from other sites like Compete still shows a vast chasm between the two. The company has raised around $40 million in venture funding.