The company today announced plans to reduce its newsroom staff by eight percent by the end of 2009. Cuts will be made by buyout, but the company will resort to layoffs should its hand be forced.

“As before, if we do not reach 100 positions through buyouts, we will be forced to go to layoffs,” New York Times Executive Editor Bill Keller wrote in a note to employees. I hope that won’t happen, but it might. I won’t pretend that these staff cuts will not add to the burdens of journalists whose responsibilities have grown faster than their compensation. Like you, I yearn for the day when we can do our jobs without looking over our shoulders for economic thunderstorms.”

Sad, sad news for a storied newspaper and an imperiled industry.

Keller’s memo in full, below:

Colleagues,

I had planned to invite you to the newsroom and break this news in person today, but I’ve been hit by something that seems to be the flu. Though I strongly believe in delivering bad news in person, I don’t want to add insult to injury by spreading infection.

Let me cut to the chase: We have been told to reduce the newsroom by 100 positions between now and the end of the year.

We hope to accomplish this by offering voluntary buyouts. On Thursday, the Company will be sending buyout offers to everyone in the newsroom. Getting a buyout package does NOT mean we want you to leave. It is simply easier to send the envelopes to everyone. If you think a buyout may be right for you, you have up to 45 days to decide whether you will accept it or not.

As before, if we do not reach 100 positions through buyouts, we will be forced to go to layoffs. I hope that won’t happen, but it might.

Our colleagues in editorial and op-ed, and on the business side, also face another round of budget cuts.

In recent years, we’ve managed to avoid the disabling cutbacks that have hit other newsrooms. The Company has chosen to protect the journalism by cutting production and other business-side costs, and the newsroom itself has managed its resources frugally. These latest cuts will still leave us with the largest, strongest and most ambitious editorial staff of any newsroom in the country, if not the world.

I won’t pretend that these staff cuts will not add to the burdens of journalists whose responsibilities have grown faster than their compensation. But we’ve been looking hard at ways to minimize the impact–in part, by re-engineering some of our copy flow. I won’t promise this will be easy or painless, but I believe we can weather these cuts without seriously compromising our commitment to coverage of the region, the country and the world. We will remain the single best news organization on earth.

I doubt that anyone is shocked by the fact of this, but it is happening sooner than anyone anticipated. When we took our 5 percent pay cuts, it was in the hope that this would fend off the need for more staff cuts this year. But I accept that if it’s going to happen, it should be done quickly. We will get through this and move on.

In my absence, Bill Schmidt and John and Jill have volunteered to take your questions this afternoon. Feel free to bring additional questions to me as soon as I’m back, or check with Bill Schmidt or John or Jill privately, or save them for the next Throw Stuff at Bill session, which is in a couple of weeks.

We often–and rightly–voice our gratitude that we work for a company and a family that prize quality journalism above all. I hope you know that the company and the family, and I, feel an equal debt of gratitude to all of you whose sacrifice and loyalty have kept us strong.

Like you, I yearn for the day when we can do our jobs without looking over our shoulders for economic thunderstorms.

Bill

Shares in the company dropped more than 27 percent percent to $6.48 in premarket trading following reports that Sun’s board rejected a formal acquisition offer by IBM (IBM). After weeks of negotiations, the two companies were thought to be finalizing a deal for about $7 billion. But IBM lowered its offer over the weekend and then withdrew it after Sun balked at the price and terms of the sale. IBM is believed to have originally offered $10 and $11 a share for Sun, but subsequently reduced that bid to $9.40 a share, which was a bit too low for the fading company’s taste.

Seems Sun (JAVA) has quite a bit more in common with Yahoo (YHOO), which notoriously balked at a $44 billion buyout offer from Microsoft (MSFT) last year, than you’d think.

Whether the deal is dead is unclear, but things certainly aren’t looking good–for future negotiations and for Sun, as Sanford Bernstein & Co. analyst Toni Sacconaghi suggested in a research note to clients this morning. “While press reports suggest that the fall-out in discussions may be attributable to brinkmanship, we do think that a collapse in the talks has considerably weakened Sun’s hand, as we see no other likely suitors, and a considerably higher potential for weakened (fiscal year third quarter) results,” he wrote. “… Given the size of the premium and the fact that Sun’s board has presided over a decline in the company’s stock price over the last eight years from over $250/share to less than $5 prior to the acquisition talks being leaked, we believe that (Sun Microsystems) is likely to face significant shareholder unrest, similar to what occurred when Yahoo declined Microsoft’s offer.”

Which means things are about to get ugly–really ugly–for Sun, which doesn’t appear to have any other likely suitors and will almost certainly see its third-quarter results weakened by the doubt it has just instilled in potential customers.

According to documents unsealed yesterday as part of a shareholder complaint against Yahoo, the company’s leadership felt an outsourcing deal with Google would be detrimental to Yahoo’s long-term push to become a “must buy” for advertisers.

These documents, prepared for a Jan. 30 all-hands meeting, anticipated the question of whether Yahoo would consider outsourcing search to Google. “We are focused on long-term value creation rather than short-term gains,” Yahoo said in response, adding that such a deal “may not take into account the longer-term impact on the competitive market if search becomes an effective monopoly.”

Sadly, Yahoo forgot to add a very important caveat to this statement: “When you’re not facing a hostile buyout offer from Microsoft.” Because when you are, concerns about long-term value creation and harm to the competitive market apparently cease to be an issue.

So why is it taking the company so damn long to respond to Yahoo’s latest stonewalling of its advances? Three days have passed since the expiration of Microsoft’s deadline for Yahoo to accept its buyout offer or face a possible tender offer and proxy battle. And we’ve heard not word one from Microsoft (MSFT), which had–up until Saturday–lobbed threats at Yahoo (YHOO) nearly as often as it issues security bulletins for Windows.

Well, that may soon change. People close to Microsoft tell CNBC that the software giant is girding itself for a proxy fight. And CNBC, noting a sudden upward trend in Yahoo’s share price today, speculates that Microsoft may launch its opposition slate of directors as soon as tomorrow.

Or it may not. A source with knowledge of the situation tell BoomTown that Microsoft may make good on its threat to scrap the deal. “I would not have said this yesterday,” the source said. “But I would not be surprised if they walked away rather than waged war.”

Boy, that was fast. Yahoo’s (YHOO) limited two-week test of Google’s (GOOG) AdSense for Search service has yielded wondrous results. So wondrous, in fact, that we’re only a week into it and “people familiar with the matter” are already telling The Wall Street Journal that the trial may well lead to a broader outsourcing deal between the two companies.

Five bucks and a Yahoo Insta-Yodel! says the Net portal’s having another sit-down with Microsoft this week.

Anyway, by some estimates, a deal with Google would increase Yahoo’s cash flow by more than $1 billion a year. A nice little spike in revenue like that would certainly bolster Yahoo’s efforts to spur Microsoft (MSFT) into increasing its unsolicited buyout bid for the Internet pioneer. That being the case, why didn’t Yahoo forge such a partnership with Google last July when it was restructuring the company’s “ecosystem” and slaughtering sacred cows? Perhaps government approval was a concern?

Interviewed this morning about whether Microsoft was haggling with Yahoo over its rejected hostile buyout, Chairman Bill Gates said that was not the case and gave no indication that the software giant was willing to up its bid. “We sent them a letter and said we think that’s a fair offer,” Gates told the Associated Press. “There’s nothing that’s gone on other than us stating that we think it’s a fair offer. They should take a hard look at it.”

Gates’s comments come amid reports that Microsoft will authorize a proxy fight for Yahoo this week–a move that will cost it quite a bit less than raising its current offer, which would require an additional $1.4 billion for every dollar added.

Don’t forget shareholders. 3Com’s stock spiked on news of the deal, sending it upward 36%, or $1.33, to $5.01, in morning trading.

For 3Com, the deal is another turn in its byzantine relationship with Huawei. In November 2003, the two companies allied to found router and switch manufacturer Huawei-3Com. Then, in March of this year, 3Com paid $882 million to buy Huawei out of the joint venture. Now Huawei’s got a minority stake in 3Com that may well increase over time. Could end up that China’s fast-growing networking-equipment vendor will end up controlling 3Com after all …

I’m worried, Larry … I think it’s imperative that we start to budget and plan.”

–Oracle CEO Larry Ellison’s accountant Philip Simon

Looks like Larry Ellison’s long-suffering accountant won’t have to reach for the Mylanta next time the mercurial CEO maxes out his more-than-a-billion-dollar credit limit. Yesterday Oracle reported surprisingly strong growth in what is traditionally its weakest quarter of the year. The company’s fiscal first-quarter profit grew 25%, easily besting Wall Street analysts’ expectations. This despite the summer’s nauseating market turbulence. And according to Ellison, this kind of financial success isn’t an anomaly, but a trend and one that will continue to keep Oracle growing faster than competitors like IBM.

“We’re doing very well against them,” Ellison said, referring to IBM.

So well, in fact, that it’s threatening to overtake the company as the No. 2 middleware provider.

“We’re growing dramatically faster than our competitors, and our target really is to beat IBM,” Ellison said. “If we maintain our trajectory and IBM maintains their trajectory, we could pass them as early as the end of this year or certainly next year to be the No. 2 player in middleware.”

Vodafone claims it has “no plans” to make such an offer. But as Sony president Ryoji Chubachi can attest, “no plans” can mean any number of things–perhaps even “carefully scripted leveraged buyout.” Certainly, Vodafone has to have kicked the idea around in the past. Acquiring Verizon Communications would give it full control of the telecom companies’ jointly held Verizon Wireless venture. And at the near-bargain basement price of $160 billion–after all, the American dollar has fallen to a 26-year low against the British pound. “Sure, $160 billion is a huge amount, but it’s not nearly as big as it used to be–if you’re paying in British pounds,” ZDnet’s Larry Dignan writes. “The dollar is a downtrodden currency these days. And Vodafone reports its financials in the pound. A Vodafone acquisition of Verizon is the equivalent of a Londoner taking a vacation in the U.S.–it’s a bargain.”