A couple of days back Yahoo! reported its earning for the Q3 2008. While the general consensus was “bad but not terrible” the company concluded (or rather the consultancy firm in September concluded) that cutbacks..
I'm guessing the employee morale at Yahoo is at zero right now. I've had the exact scenario happen to my employer in 2000. Layoffs to cut costs, combined with building an expensive huge building that was half-empty. Two years later the most competent people had moved to other companies without waiting to be laid off. The rest were doing a lousy job and hoping to get a severance package, not a raise or a promotion. That company's stock is down from $150 to under $1 these days.