Updates to this story
According to Techcrunch Yahoo is condsidering cutting staff significantly, by up to 20 percent, citing two independent sources.
The news comes not long after rival Google was found it would be offering a 10 percent payrise and $1,000 bonuses to its staff.
A 20 percent reduction in staff, currently amounting to 14,000 employees, would mean that Yahoo would be looking at making in the region of 2,500 redundancies.
Yahoo has denied any precise figures but has so far been unable to deny that there will be job losses in the near future.
"Yahoo is always evaluating expenses to align with the company's financial goals. However, a 20 percent reduction in Yahoo's work force across the board is misleading and inaccurate," a statement said.
This statement certainly doesn’t deny staff will be shown the door, though there are other more conservative estimates of losses. The Wall Street Journal has suggested the figure may be closer to 650.
However it is noted that under the Worker Adjustment and Retraining Notification (WARN) requirements it is necessary that in order to announce lay-offs of more than 500 employees, it is state law that a company must provide at least 60 days notice – and Yahoo could be set to issue one.
Yahoo previously announced a five percent lay-off of 700 workers in 2009, having already cut numbers in 2008, however staff numbers have been growing steadily since then.
The rumours of large job losses have come at a difficult time for Yahoo which reported less than impressive third quarter figures, with revenue below forecasts and profit narrowly beating expectations. There have also been a number of prominent executives jumping ship of late.
Reports of a takeover have also been widespread, with AOL apparently hiring advisers to prepare for a potential surprise takeover backed by major invenstors.
There has also been talk of Alibaba Group, a company which Yahoo owns a 40 percent stake, launching a bid with founder and chariman Jack Ma being approached by a group of private equity investors to gauge his interest in attempting to buy out Yahoo.
Alibaba, which recently reported 55 percent increase in net profits from last year, has given little indication to the likelihood of this happening. Yahoo meanwhile has begun working with Goldman Sachs to help fight any takeover bids.