I'm not a Valleywag regular but felt compelled to write after Blake & Sue's latest cost-cutting shenanigans.

After filling up my salad box as usual, I head over to the cashier to pay my usual 4.25, a fair price for a smallish-medium salad whose cost is supposedly company subsidised (that's what they told me when I joined a few months ago). Today, however, I had to put my take out box on a scale since Yahoo is charging by weight now. So my 4.25 salad cost me $7.75 (I was an idiot for using the dense ranch dressing). What an excellent way to further kill morale during such trying times at the company. Best of all, Management decided to keep this secret from employees! They could have mentioned it at the all hands but they're spineless bitches who couldn't even take the issue of the cafe head-on.

I never thought a management team could be so stupid to strip away these perks that increase productivity when there are many larger costs that can be cut first. After this, it wouldn't be surprising for them to stop offering coffee or charging for the water. Luckily they're not charging people to use the bathroom as the $.50/flush proposal got nixed at the last board meeting (although the proposal may be revisited at any time).

Anyway, I just needed to rant because I cannot believe a firm would be so stupid to cut back on perks that improve productivity while wasting money on shit like a Halloween party and a bunch of banners touting the greatness of Yahoo around the Sunnyvale campus (and the door props...gimme a break). Not to mention the killer haloween party. And chauferring Sue in from the North Bay each time she comes in. Gosh this place IS as bad as the stuff you read!

Yahoos at the meeting were told that the job cuts would come after Thanksgiving. And the severance? Jorgensen said the company would "do right by Yahoos" — and referred to the legally mandated notice period required by the WARN Act. Translation: Yahoos will get 60 days' severance, because it's the law. Oh, and there's no point in cancelling the holiday parties, because they've already been paid for. After the all-hands, Gale and other Yahoo employees proceeded to an Oktoberfest party.

They will likely do a public round of layoffs soon, but since they are currently preparing for annual reviews- definitely cutting the bottom 10% who will be left after the layoff... but in addition- they will likely be as harsh as they can and some good people who are not performance problems, but are not the water walkers will feel undervalued and leave due to their review. This will likely get them down by another 1000- 1500 heads by mid year 2009.

What's interesting about this rumor: It fits with what we've heard about Yahoo CFO Blake Jorgensen pushing to slash employees' severance packages. By disguising layoffs as negative reviews, Yahoo management may push employees to leave, sans severance.

Zero severance would certainly evaporate any remaining support CEO Jerry Yang has within the company. But our tipster says Sue Decker, a close friend of Jorgensen's who hired him into the company, opposes his severance plans. So what's Jorgensen's game?

• President Sue Decker, who has mostly instigated management upheaval to her Machiavellian advantage, is being paid in the "upper quartile" of comparable executives at Adobe, Apple, eBay, HP, IBM, Microsoft, Motorola, Network Appliance, Oracle, and Time Warner.
• Raises handed out to Decker, CFO Blake Jorgensen, general counsel Michael Callahan, and top accountant Michael Murray:

  In connection with her promotion to the position of President, Ms. Decker's annual base salary was increased from $500,000 to $815,000, effective July 1, 2007. Mr. Jorgensen's annual base salary was set at $450,000 upon his joining the Company in June 2007. Mr. Callahan's annual base salary was increased effective April 1, 2007 from $325,000 to $360,000, and Mr. Murray's annual base salary was increased effective July 1, 2007 from $340,000 to $360,000. On March 3, 2008, the Compensation Committee increased the 2008 annual base salary levels of Messrs. Jorgensen, Callahan and Murray to $500,000, $420,000, and $375,000, respectively.

• Decker received 90 percent of her target bonus, or $1.1 million. Jorgensen received the same percentage for a bonus of $405,000, even though he hadn't worked at Yahoo a full year in 2007. (Jorgensen, though not previously CFO of a public company, did have this unique qualfication for his job: He was the best man at Decker's wedding. Decker is now divorcing.)
• Decker made a total of $14.8 million, including stock-based compensation, in 2007.

2:02 Still waiting for our friends CEO Jerry Yang, CFO Blake Jorgensen and president Sue Decker to join us on the call. Meanwhile, I'm wondering if Yang will heed one Yahoo search marketer's call for more integration with Google.

2:04 The gang is all here: Yang, Decker and Jorgensen. First, though, a nice long disclaimer.

2:08 Yang: These results are are the more remarkable considering the economy and Microsoft's proposal. "Our strategy and investments are beginning to pay off." We have the capital we need to substantially grow revenue.

2:10 Yang: Let me talk about Microsoft. Microsoft's proposal substantially undervalues Yahoo and our one-of-a-kind global brand. Our board and management team continue to be open to any and all alternatives, including a sale to Microsoft. Take one thing away: our board and management are committed to maximizing shareholder value.

2:12 Yang goes over highlights from the quarter: We acquired Maven and previewed AMP from Yahoo. (Insiders tell us AMP needs more cash and manpower if it's going to live up to Yang's expectations.)

2:51 Yang says closing the gap in search marketing will depend on Panama. He doesn't mention the Google trial. He says Yahoo's greatest opportunity is in display advertising. The economy's weakness will drive marketers online, he says.

2:54 Question: Asian assets are a big part of Yahoo's value. What are they hypothetical things you could do with them? Yang's answer: We can't talk about our alternatives. We think the position we've achieved in China and Japan are second to none. It won't be able to be recreated in any form. We think of that as a scarcity value. We also think it's a way to provide transparency.

2:15 The call goes to Decker. Decker highlights progress in Q1: Giving users a consistent Yahoo, opening to third-parties and creating social connections. "We're not trying to be another social network."

2:19 Decker: We have a strong number 2 position in search. Last summer, we focused on catching up to the leader. Now we're going for differentiation. Our next advance will be Open Search, which we call search monkey. We'll allow third parties to improve our search. ComScore reports that Yahoo's search relevance rate was 72 percent versus the previous market leader's 69 percent.

2:23 Decker: Yahoo Buzz has 120 publishers already. "With more coming in every week." This model is self-reinforcing. "With our enormous scale this should make us the partner of choice for publishers." Video on Flickr has already quadrupled videos by Yahoo users across the entire Yahoo network.

2:25 Decker: Panama continues to make gains in click-through rates and user-experience. Search revenue was up 20 percent in the US, 15 percent Internationally. We have made progress on click-yield. The price per click upside is still significant. We believe we can make steady improvements. We just launched minimum bid changes, providing smaller business opportunity. The $.10 minimum bid is gone. This will help us achieve our three goal of 15 percent RPS gains.

2:27 Decker on outsourcing to Google: We see tremendous value in being a principle player in search and display. We've narrowed the search monetization gap. There may be more than one way to continue to do that. We've tested Google. That may continue.

2:30 Decker talks about Yahoo AMP: a web-based hosted application. The platform will standardize how operations are handled. We will "begin rolling it out in Q3." This should lead to a "meaningful" boost in revenues. Again, sources tell us AMP needs a lot more cash, hardware and engineering manpower if it's going to meet these expectations.

2:32 Jorgensen takes the call. Spouts numbers. Find them here.

2:34 Jorgensen said Yahoo spent $14 million for advice on how to deal with Microsoft.

2:34 Owned and operated search was up 15 percent. Display was up 16 percent. Finance, travel and retail advertising is down, due to a softening economy. Overall, Yahoo is fine.

2:43 Jorgensen says Yahoo's Q2 outlook ($1,730 - $1,930 million) excludes layoff costs and costs associated with Microsoft's bid.

2:44 The call goes back to Yang. Time for questions.

2:47 Question: What kind of economic outlook did you bake into your outlook? Street estimates expect lower online advertising growth. Answer, from Jorgensen: We believe the plan is based on market growth and Yahoo's growth relative to that.

2:48 Question: We've noticed that TAC is going down as a percentage of revenues. Are you getting better deals? Jorgensen: TAC decreased around 4 percent. There is upward pressure on TAC-rates as competition gets tougher. Competitors are also building out display networks. We're disciplined and you're seeing that.

2:50 Question: How much is Right Media helping remnant advertising? And which segments are weak and why? Decker's answer: We call remnant class 2 or non-guaranteed advertising. We are seeing significant growth in class 2. Revenues are close to doubling. Jorgensen: Some of the stronger categories in search are also strong in display.

2:51 Question: Owned and operated search is up. You just removed the minimum bid. Correlated? Decker's answers: Panama was up only 10 percent year-over-year this quarter because we're competing against Panama's first quarter now.

2:56 Question: How well will AMP work with other ad networks? Would it still work if you're using Google search marketing? Decker's answer: It's build on the RIght Media exchange, so any network in that exchange would work with it. As for the second question: AMP is a primarily a display advertising platform. It also involves content-matching advertising, which is sometimes considered search advertising. Over time, search will be integrated fully into AMP.

2:58 Question: International growth was up 7 percent. Was there a one-time event to drive this? And how much did Microsoft impact growth? Jorgensen's answer to the first question: There was not a one-time event. There's just more pressure on affiliates. Yang answers the second: I think our business performed robustly. We're keeping an eye on the ball. It's hard to say any impact at all. We ended up ahead of where we thought we would be.

3:00 Question: Please tell us more about the weak advertising categories. Decker's answer: We think the economic downturn makes online advertising more attractive.

3:03 Question: Do you think you're gaining ground on search monetization? And why is your year-long guidance higher? Decker's answer: We thought the gap was close to 100 percent when we launched Panama. In US sponsored search, we feel that we've narrowed the gap by 30 percent. There's 60 to 30 percent remaining. Jorgensen answers the second: We are seeing cost-savings.

3:05 Question: The focus seems to be on monetizing the ad inventory you already have. What are you doing to grow your inventory? Yang's answer: We need both inventory and better monetization. There's a higher focus on monetization because it's a very nascent stage. But we continue to invest in inventory on and off the network. We've seen robust growth in pageviews. Bye.

1. Public companies must disclose how much tax they expect to pay. Yahoo could project a lower tax rate than they actually expect, lowering costs and increasing profits. This gimmick shows up in the filings, but most investors won't bother to ask questions if Yahoo's shares go up. The bearish reality behind Google's big first-quarter numbers aren't slowing down the rise of its shares.
2. Delaying expenses. (Any Yahoos had travel denied? Drop us a line and let us know the details.)
3. Rejiggering ads to generate more revenue per page. Google is a master at this, but Yahoo may be slowly learning some of its tricks.(Photo by cogdogblog)
4. Relaxing on click fraud. Yahoo claims to be deeply concerned with erroneous clicks on advertisers' ads. But if a little more cash keeps the company independent, maybe the company's automated filters can be dialed down for a month or so.

Skip to 2:30 for a startling confession from Orchard. At 6:00, Allspaw explains why Googlers might not have the proper equipment to play.

CEO Jerry Yang gets a ball to the face.

CFO Blake Jorgensen waits patiently for the blow.

Network Division chief Jeff Weiner can take your balls like a man.

(Photos by Yodel Anecdotal)

Silicon Valley gossip site to become part of Yahoo!'s starting point strategy.

Yahoo! today announced it will make an unsolicited takeover bid to purchase Valleywag, the Silicon Valley technology gossip site, as part of a push to increase "starting points" for consumers.

"Though I, personally, haven't always seen eye to eye with its editors," said Blake Jorgensen, CFO of Yahoo!, in a message to employees," we are well aware of how many people start their online experience with Valleywag and hope that as part of the Yahoo! family, we can all just get a long."

Often called "Yahoowag" for its constant coverage of Yahoo! gossip, no matter how minor or incorrect, the pairing of the two is expected to be immediately accretive to Yahoo!'s earnings - especially when considering Valleywag's daily readership that some estimate in the "hundreds."

Terms of the deal were not disclosed. No reaction to the offer has been heard from Valleywag editors who, for once, have been strangely silent.

The score stands Valleywag 1, Yahoo management 0. Yahoo employees, consider Valleywag an upgraded, open version of your Backyard intranet. New features in this release include truth and honesty. And best of all, much of the content is user-generated.

Jerry Yang, CEO He'll be a large Microsoft shareholder after the deal goes through, so it's likely he'll get a board seat. And perhaps he'll get to keep the "Chief Yahoo" title.

David Filo, cofounder Might be named a Microsoft Fellow, working in datacenter operations — as he prefers.

Sue Decker, President Gone. There's no position Microsoft can give her that will suit her ambitions. Not to mention the hash she's made of things at Yahoo.

Blake Jorgensen. CFO Gone. Microsoft doesn't need another CFO, and he's a close Decker ally.

Ari Balogh, CTO Bad timing: Balogh just left VeriSign for Yahoo this week. If he'll settle for a title below CTO, Microsoft might grudgingly make room for him.

Marco Boerries, EVP, Connected Life Gone. He's widely disliked within Yahoo, and Microsoft already has plenty of mobile dealmakers.

Michael Callahan, General Counsel Gone. First, we fire all the lawyers.

Gregory Coleman, EVP, Global Sales Already announced his "retirement." Even more gone than he already was.

Usama Fayyad, Chief Data Officer A keeper. Microsoft needs better data analysis.

Qi Lu, EVP, Engineering Search A keeper.

Michael Murray, Chief Accounting Officer Gone.

Jill Nash, Chief Communications Officer Could stay. Microsoft desperately needs better PR in the Valley.

Ash Patel, EVP, Platforms and Infrastructure Division Gone. He's already checked out, insiders say, but it will take a takeout to dislodge him from his desk.

Libby Sartain, Chief People Yahoo Already rumored to be out.

Hilary Schneider, EVP, Global Partner Solutions Could stay, though she's a Decker ally. Microsoft lacks credibility with newspapers, Schneider's strong suit.

Jeff Weiner, EVP, Network Division Gone. Weiner, a Semel guy, has managed to hold onto his job against the odds. But he's not respected in Redmond.