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MySpace cleaves workforce nearly in half with 500 layoffs; UPDATE: Sale or spinoff looks imminent

MySpace Logo (Nov 2010)Yesterday we reported that MySpace China underwent some severe cuts, including its Chinese CEO and most of its staff. Today, the social media company confirmed it’s slashing about 500 employees – nearly half of its personnel – in an effort to overhaul the suffering website.

In a statement today, MySpace CEO Mike Jones said “These changes were purely driven by issues related to our legacy business, and in no way reflect the performance of the new product.” He also remarked that these actions are a “tough but necessary” part of putting MySpace on the path to increasing profits. Jones also claims that despite current developments, the upgraded site has been “trending positively.”

The revamp MySpace underwent earlier this year saw the site alter its focus to music and video content. While Jones seems to be defending the modifications, it’s clear the company’s struggles have continued. In an interview with Fortune prior to the relaunch, Jones admitted that MySpace had diverged from its original structure, something that contributed to its user loss.

Parent company News Corp recently warned the site it had months to turn its finances around, and talk of a MySpace sale is anything but off the table. All Things Digital reports that a sale is imminent, and that it is being shopped around to “private equity buyers.” The site also claims it’s possible Yahoo could scoop up MySpace.

This isn’t the first round of serious cuts MySpace has been subject to. June 2009 saw the company purge itself of nearly 1,000 jobs in two different rounds of elimination.


[UPDATE]

One day after cutting nearly half its staff, MySpace admits it’s up for grabs. “News Corp is assessing a number of possibilities including a sale, a merger and a spinout. The process has just started.” MySpace spokeswoman Rosabel Tao told Bloomberg today.

A MySpace sale is old news, but up until this point neither News Corp nor the struggling social site have confirmed this move. Yesterday, in the midst of its job slashings, CEO Mike Jones claimed MySpace was trying to get on the track to profitability. From the sounds of it, that may no longer be necessary.

Two anonymous sources told Bloomberg that in a private preliminary meeting, Jones admitted the possibilities of MySpace’s fate. According to the insiders, he said that were News Corp to decide on a spinoff, current employees would receive shares in the acquiring company and News Corp would help fund it.

And it sounds like there are interested parties. So far, we’ve Google, Zynga, and Yahoo mentioned as potential suitors.