“Today’s personnel changes are part of our ongoing strategy to best position Yahoo for revenue growth and margin expansion and to support our strategy to deliver differentiated products to the marketplace,” the company said. “We’ll continue to hire on a global basis to support our key priorities.”

“Yahoo is grateful for the important contributions made by the employees affected by this reduction,” the company added. “We are offering severance packages and outplacement services to these employees.”

The unemployment rate in the United States stands above 9 percent. Kara Swisher at AllThingsD reported that the layoffs would affect as many as 700 people. The Yahoo job cuts had been telegraphed earlier in the year, but that doesn’t mean it will be easier to bear for the families affected.

“This is probably not the best time to lay people off,” said Yun Kim, an analyst who covers Yahoo for Gleacher and Co. “But it’s just part of their plan to try and realign the head count.”

At a time when many of Yahoo’s direct competitors like Google, AOL and Facebook are hiring, today’s layoffs are a stark reminder of how the purple portal how failed to keep pace with its rivals.

Luckily, the market for tech talent is so hot, a virtual market for soon-to-be-former Yahoo employees has already sprung up on Quora.

Carol Bartz, the outspoken former Autodesk CEO who took the reins of Yahoo two years ago, has been under pressure to right the fortunes of the flagging web portal.

“I think the number one issue that she’s had to face is that Yahoo was a sinking ship with or without her,” Kim said. “She just hasn’t been able to turn it around fast enough. It didn’t help that a lot of the senior executives have already left.”

Kim says he’s neutral on the stock, which is trading at around $16 per share.

But what about the much-ballyhooed Yahoo-Microsoft search partnership, in which Microsoft relieved Yahoo of its web search infrastructure — and big capital expenditures? Kim doesn’t anticipate any meaningful benefit from that deal until well into 2011.

Meanwhile, for the last few months, the tech world has watched as rumors have circulated about a possible Yahoo merger with AOL (my former employer). Those talks have apparently come to naught.

“The real sticking point is that somebody needs to come up with cash money to buy Yahoo’s Asian assets,” Kim said. Yahoo’s stake in Alibaba and Yahoo Japan, along with the company’s other Asian assets, is worth an estimated $20 billion, give or take a few billion.

But so far, no cash-buyer has been found. AOL’s attempts to find a partner in the private equity market have apparently thus far been unsuccessful.

A Yahoo spokesperson did not return a call for comment.

The Yuletide layoffs are the latest bit of bad news for the one-time internet pioneer, which has fallen on hard times over the last few years thanks to mismanagement, bureaucratic inertia and a series of unsuccessful merger moves. Yahoo famously spurned Microsoft’s more than $30-per-share offer — a move which seems ill-considered in hindsight. In 2008, Micrososft offered $45 billion for Yahoo. Today, the purple portal is now worth about $21 billion by market capitalization.

Yahoo’s share price has stagnated at around $15 – $17 per share since its peak at about $40 five years ago.

“Clearly there are structural issues with this company,” said Ben Schachter, who covers Yahoo for Macquarie Securities. “Yahoo is just not at the forefront of consumers’ minds anymore. People are making the transition from the desktop to smartphones and tablets, and they’re seeing a lot less of Yahoo.”

Schachter said Yahoo is losing mind-share, and perhaps more importantly, time-share, to Google, Facebook, and Twitter. “They need to be able to turn around the trends in usage, but Carol is having a difficult time.”

Despite that, the company remains very popular with internet users. Yahoo’s homepage remains an immensely popular destination. Yahoo e-mail is the most widely used online e-mail service in the United States, and its finance, sports and celebrity news sites are also category leaders.

And the company has made an impressive foray into premium journalism.

Still, despite those positive developments, the company continues to struggle.

Schachter says the real bright spot for Yahoo is its Asian assets, which he calls the company’s “crown jewels.” He said: “In retrospect, the Alibaba deal was the smartest thing Yahoo ever did.”

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Authors: Sam Gustin

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