Yahoo begins telling workers who's being laid off

SAN FRANCISCO -- Yahoo yhoo on Wednesday began notifying employees who are among 1,500 to be laid off this year.

The struggling Internet company, which announced the 10% workforce reduction in October, notified a majority of those affected. The rest will find out by the end of the month, Yahoo says.

Yahoo plans on consolidating offices in North America and closing a handful of offices in northern Europe. It says it will hire aggressively in lower-cost locales such as Eastern Europe, India and Southeast Asia.

If the economy continues to falter, Yahoo is prepared to cut more jobs and other expenses in 2009, Yahoo Chief Financial Officer Blake Jorgensen has said.

"The reductions we're making are very hard, but they are also very necessary — as we focus on the long-term health of our business," Yahoo CEO Jerry Yang said in a blog post Wednesday.

The highest-profile personnel change is who will replace Yang, who in November said he would step down.

On Tuesday, one name surfaced as a possible successor: former Vodafone Group CEO Arun Sarin.

Sarin is one of several candidates being considered by Yahoo's 11-person board, according to a report in The Wall Street Journal, citing unnamed sources. USA TODAY could not independently confirm that Sarin is under consideration.

A Yahoo spokesman had no comment. Sarin couldn't be reached for comment.

Whoever is picked to guide Yahoo faces a grueling task.

The Internet icon is mired in a prolonged slump, during which it has lost market share and sales to rival Google. goog

The new Yahoo CEO must transform its search, media and communications properties, says Martin Pyykkonen, an analyst at Wunderlich Securities.

One of the company's largest investors, Ivory Investment Management, is urging Yahoo to pursue a sale of its search unit to Microsoft. msft Microsoft CEO Steve Ballmer has said he's open to such a deal.

Yahoo rejected Microsoft's $47.5 billion takeover offer earlier this year.

Yahoo's next choice of CEO depends largely on what it does with its search business, analysts say.

"They're unlikely to get a CEO until a search deal is done or not," says Jonathan Yarmis, an analyst at AMR Research.

For that reason, Yarmis thinks the consideration of Sarin — who has vast experience in mobile technology — indicates that Yahoo is seriously considering selling its search business and concentrating on mobile services.

Sarin, 54, helped turn around Vodafone vod— one of the world's largest telecom companies — by cutting costs and aggressively expanding into high-growth markets in India and Turkey.

Still, he faced criticism. Shareholders threatened to unseat him for failing to diversify beyond Vodafone's slow-growing European business fast enough.

Yahoo shares rose 10%, to $13.40, in trading Wednesday.