It seems like Yahoo, which hasn't really been operating at peak the last few years, will lay off between 1500 and 2500 of its about 12 000 employees at the end of January, if PaidContent's sources are to be believed. At the same time the talk about how Yahoo! could improve its stock performance has increased in, among other places, the Wall Street Journal. Yahoo's stakes in Yahoo Japan, co-owned with Softbank, and Chinese Internet company Alibaba represents almost half the market capitalization of Yahoo.
With regards to the discussion about outsourcing its search engine to Google or Microsoft, there are some strategic issues for Yahoo. Using Google would make Google even more dominant, which could lead to a tricky situation when it is time to renegotiate the deal as there probably would be fewer alternatives to chose from. As for going with Microsoft, apart from a potential big lump of money upfront, there will likely be no improvement in neither search quality nor monetization in the foreseeable future. Which makes a potential switch less interesting.