Silicon Alley Insider blog and Reuters are reporting that Yahoo could be announcing drastic staff cuts int the coming weeks.
Yahoo is not commenting on the rumour that it has created a list of "1,500-2,500 jobs that may be eliminated in the next two weeks".
The company, which has almost 14,000 employees, may announce the redundancies on 29 January if the blog report is right.
However, a Reuters source said that the number of potential casualities had been grossly exaggerated and will be in the hundreds rather than thousands.
"There will be some reductions in the workforce", the source told Reuters. "It would likely be in the hundreds."
And responses to the report on the Silicon Valley Insider imply that the final decision as to whether or not to go ahead with the cuts has not been made.
Former Wall Street analyst Henry Blodget said Yahoo Chief Executive Jerry Yang was still deciding whether to go ahead with the layoffs - and could pull out of the plan if the stock price rebounded.
However, he added his belief that Yahoo needs to reduce its headcount by at least a thousand staff, echoing calls by Sanford C. Bernstein analyst Jeffrey Lindsay who urged cuts of 15-20% to reinvigorate Yahoo's stock.
Reuters says that Yahoo has been struggling in the face of competition from sites such as Google and social networking sites such as Facebook.
It reports: "Yahoo has been struggling to recover from two years of competitive setbacks that has led revenue growth slow to around 12% or about one-third of its previous growth rate".