SAN FRANCISCO, USA: Yahoo Inc is preparing to lay off several hundred workers in the first round of cuts since Carol Bartz became chief executive in January, a source with knowledge of the situation told Reuters.

The layoffs could be announced next Tuesday, when Yahoo reports its first-quarter financial results, according to the source, who wished to remain anonymous because of the issue's sensitivity.

Yahoo's last round of layoffs was in December, under former CEO and co-founder Jerry Yang. The company, which is the No. 2 U.S. Internet search provider, finished 2008 with roughly 13,600 employees, down by more than 1,600 employees from the third quarter of 2008.

Yahoo declined to comment on the planned layoffs, first reported by the New York Times on Tuesday.

The cuts would come almost two months after Bartz implemented a broad internal management reorganization and as Yahoo explores partnerships to help revive its growth.

Yahoo and Microsoft Corp met recently to discuss a deal involving the company's search business, according to a source familiar with the matter who wished to remain anonymous.

The search company has projected that sales in the first quarter could be down as much as 16 per cent at $1.53 billion.

Shares of Yahoo were up 3 cents at $14.10 in after hours trade.