Looks like it’s going to be a painful Christmas in Sunnyvale amid reports that Yahoo will lay off up to 700 employees Tuesday.

[Updated, 1:30 p.m.: The company released a statement on the cuts Tuesday afternoon: "Today’s personnel changes are part of our ongoing strategy to best position Yahoo! for revenue growth and margin expansion and to support our strategy to deliver differentiated products to the marketplace. We’ll continue to hire on a global basis to support our key priorities."



"Yahoo! is grateful for the important contributions made by the employees affected by this reduction. We are offering severance packages and outplacement services to these employees."]

That’s about 5% of the Internet giant’s roughly 14,000 workers. The cuts will mostly come from the product division, according to Wall Street Journal technology reporter Kara Swisher and others.

The layoffs will likely end by afternoon. Earlier, some Yahoo users on Twitter posted that they had run into problems accessing Yahoo Mail and other services. There was some (unproven) speculation among the Twitterati that the layoffs were related to the service problems.

Chief Executive Carol Bartz has recently defended herself and the company, saying that Yahoo is “hiring every day.”

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-- Tiffany Hsu

Photo: Yahoo's Sunnyvale, Calif., headquarters. Credit: Paul Sakuma / Associated Press