As previously reported, Yahoo on Wednesday began laying off employees, following up on an announcement to cut its workforce by at least 10 percent in an effort to turn the struggling company around, AFP reports.

Meanwhile, Ivory Investment Management, which owns a 1.5 percent stake in Yahoo, is pushing Yahoo's board to sell its Internet search business to Microsoft, a refrain we've heard before.

"This is a tough time for all of us," Yang wrote in an e-mail to employees. "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."

The report said that the economic downtown hit Yahoo especially hard, as advertisers began to scale back and the public turned its attention toward Google, Facebook, and MySpace. A deal between Yahoo and Microsoft still has potential to shake up the mobile space in many ways, depending on how it goes down—if it ever happens.