Struggling Yahoo Planning New Data Centre

Yahoo may build a data centre in western New York, creating jobs for a depressed local economy.

State officials including U.S. Sen. Charles Schumer have been in talks with the search-engine giant over building the facility, which could be as large as 60,000 square feet and employ between 50 and 100 people.

While describing a possible Yahoo data centre as “not a done deal” in a 10 May press conference, Schumer described the chances of terms being set as “very, very good,” according to reports.

Yahoo already plans to build a 150,000-square-foot data centre in Nebraska, at an estimated cost of $100 million (£66m). That location will employ around 50 people.

According to Business First of Buffalo, Schumer had been in direct talks with Yahoo CEO Carol Bartz over the possibility of opening the data centre in his state. An incentive package apparently being prepared by the state government includes low-cost hydropower for the electricity-hungry facility. No timeline for possible construction was announced.

“We are continuously evaluating new ways to best support our business needs,” Yahoo said in a statement to eWEEK. “We are in a dialogue with officials in New York, as we are with other potential options, but we do not disclose information related to ongoing discussions.”

Even as it considers building data centres, Yahoo has been looking to streamline its global work force, planning to cut some 5 percent of its global work force. The search-engine company is locked in a fierce battle with Google over market share, with Yahoo occupying 20.5 percent of the market in comparison to Google’s 63.7 percent.

Yahoo still holds an advantage in e-mail users, some 91.9 million of whom relied on Yahoo Mail in 2008; by comparison, AOL Mail had 46.6 million unique users, while Google’s Gmail has 29.6 million users.

Yahoo is still recovering from a 2008 hostile takeover bid by Microsoft, which drove Yahoo’s stock downward and forced out former CEO Jerry Yang in favor of Carol Bartz. For her part, Bartz has refused to comment on rumors that the two companies could still engage in an advertising or search partnership.

For the first quarter of 2009, Yahoo reported revenues of $1.58 billion, down 13 percent from the same quarter in 2008.