While MySpace still has an enviable user base, the future is looking dicey. Facebook continues to grow at a relentless pace -- and appears to be the de facto social network. There is also the sudden emergence of Twitter (which, by the way, is even putting pressure on Facebook).To deal with this, MySpace's owner, News Corp (NYSE: NWS), is taking action. Just last week, the company slashed about 30% of the U.S. workforce.
As for this week, about two-thirds of the global work force will be fired, going from 450 to 150 employees.
It's brutal, and no doubt it will crack morale, which makes it difficult when trying to beat back the competition.
Actually, MySpace is also being realistic about the ailing online advertising environment. In fact, there's talk that Google (NASDAQ: GOOG) will scale back its promotion on the website.
True, by cutting the overhead, MySpace should be able to weather the storm. But it will certainly leave some scars.
Tom Taulli is the author of various books, including The Complete M&A Handbook
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9-13-2009 @ 5:14PM
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