Update: Yahoo gives the axe to 2,000 employees (or 14 percent of its workforce)

It’s raining pink slips at Yahoo today, as the iconic tech company announced it was laying off 2,000 employees — or 14 percent of its total workforce — as part of a massive restructuring effort.

Yahoo has suffered a great deal of turmoil over the past few years. Board members fired long-time CEO Carol Bartz in September 2011 as punishment for failing to increase revenues as well as significantly losing advertising share from Facebook and Google. During her tenure (and prior to it), Yahoo’s products grew stagnant and failed to keep pace with innovation from competitors. Overall the company suffered from a lack of leadership, which is something new CEO Scott Thompson was charged with fixing after assuming his post in January.

“Today’s actions are an important next step toward a bold, new Yahoo — smaller, nimbler, more profitable and better equipped to innovate as fast as our customers and our industry require,” Thompson said in a statement about the layoffs.

Yahoo estimates that it will save $375 million once all the layoffs have been completed, with an expected $125 to $145 million in a pretax cash charge relating to employee severance packages. The company declined to give a more thorough analysis of the layoffs until after its first quarter financial results on April 17.

Sources with knowledge of the matter previously indicated that the layoffs will touch all units of the company, with Yahoo’s product division getting hit the hardest, according to AllThingsD’s Kara Swisher, who first reported the news last night. Deep cuts are also expected for Yahoo’s Local Businesses, marketing, and research divisions, while Yahoo’s media division suffers the least.

The report also speculates that Yahoo could end up laying off even more employees in the next few months as it continues to trim the fat with its new strategy. Yahoo is still contemplating what it wants to do with its advertising technology businesses (Right Media and APT) as well as its search business — both of which employ thousands of workers.

Full statement from Yahoo below:

Yahoo! today confirmed that it is taking important next steps to reshape the company for the future.

“Today’s actions are an important next step toward a bold, new Yahoo! — smaller, nimbler, more profitable and better equipped to innovate as fast as our customers and our industry require. We are intensifying our efforts on our core businesses and redeploying resources to our most urgent priorities. Our goal is to get back to our core purpose — putting our users and advertisers first — and we are moving aggressively to achieve that goal,” said Scott Thompson, CEO of Yahoo!. “Unfortunately, reaching that goal requires the tough decision to eliminate positions. We deeply value our people and all they’ve contributed to Yahoo!.”

Yahoo! has a solid foundation — nearly 700 million users and thousands of advertisers that engage with Yahoo! properties regularly and trust the company with their data and their business. Through its restructuring efforts, Yahoo! intends to grow by responding more quickly to customer needs and competing more effectively in areas where it can win. Yahoo! has identified key parts of the business — a select group of core businesses, the platforms that support those core businesses, and the data that drives deep personalization for users and ROI for advertisers — where the company will intensify efforts and redeploy resources globally, all focused on increasing shareholder value. With a clear focus on profitability and growth, the company will be disciplined in its investments and radically simplify how it builds, launches and maintains many of its properties and products.

Today, the company will begin the process of informing employees about these changes. As part of that effort, approximately 2,000 people will be notified of job elimination or phased transition.

Yahoo! expects to realize approximately $375 million of annualized savings upon completion of all employee transitions. The company currently expects to recognize the majority of an estimated $125 to $145 million pretax cash charge relating to employee severance in its second quarter financial results. The company may incur additional charges in connection with this action. More information will be provided about Yahoo!’s future direction in conjunction with the release of its first quarter financial results on April 17, 2012.

Update 4/4/2012 (11:52 a.m. PST): A company-wide letter from Yahoo CEO Scott Thompson about the recent layoffs was recently obtained by The Wall Street Journal. In it, Thompson offers a more concise description for the company’s restructuring plans, which were vaguely touched upon in the press release. Essentially, Yahoo will focus its efforts on driving three portions of its business: Core Media and Communications, Platforms, and Data.

We’ve pasted Thompson’s  full letter below:

Yahoos –

Today we are restructuring Yahoo! to give ourselves the opportunity to compete and win in our core business. The changes we’re announcing today will put our customers first, allow us to move fast, and to get stuff done. The outcome of these changes will be a smaller, nimbler, more profitable Yahoo! better equipped to innovate as fast as our customers and our industry require.

Over the last 60 days, we’ve fundamentally re-thought every part of our business and we will continue to actively consider all options that allow Yahoo! to put maximum effort where we can succeed. As part of this process, I believe we have to focus to win in a select group of core businesses globally:

Core Media and Communications: Our content, media, and communications experiences must be best in class. That includes getting today’s core properties right and innovating on a next generation of great product experiences across all screens.∙

Platforms: We must make our core platforms and systems a genuine strength for Yahoo! – platforms that we can really leverage to support our massive scale, drive the deepest personalization, and boost speed to market.∙

Data: Our massive data sets must become a genuine competitive advantage for Yahoo!. We have to unlock the value in our data to allow us to really understand our 700 million users, encourage and win their engagement and trust, leverage everything they do with us to more fully personalize their experiences, and to give our advertisers the immediate insights they are rightfully demanding.

We are intensifying our efforts on our core businesses and redeploying resources to our most urgent priorities. Our goal is to get back to our core purpose – putting our users and advertisers first – and we are moving aggressively to achieve that goal.

Unfortunately, reaching that goal requires the tough decision to eliminate jobs, which means losing colleagues and parting with friends. Today, we will begin the process of informing employees about these changes. As part of that effort, approximately 2,000 people will be notified of job elimination or a phased transition. We value our people and for those who will be leaving, we thank you for all you have contributed to Yahoo!. We will treat all of our people with dignity and respect, providing resources to help manage through their transition.

Change is never easy. But the time has come to move Yahoo! forward aggressively with increased focus and accountability. Our values have always been about treating all Yahoos with dignity and respect, and today is a day to embrace those values. This is an amazing company with exceptionally talented people and I know we will all do our best to encourage each other through this difficult period of transition.

Pink slips image via Eric Von Seggern/Shutterstock