Yahoo today announced that it will cutting at least 10% of its staff during the fourth quarter of 2008 in an effort to adjust to a softening economy.

The company currently employed about 10,700 people at the end of the second quarter and began cutting staff from its payroll in the third quarter, the company said. During the fourth quarter, Yahoo “expects to reduce its global workforce by at least 10%, which suggests that the headcount will be reduced by about 1100 people.

“The company's goal is to reduce its current annualized cost run rate of approximately $3.9 billion by more than $400 million before the end of 2008,” Yahoo said. “The company anticipates that both headcount and non-headcount-related costs will be reduced by these actions.”

Yahoo chief financial officer Blake Jorgensen justified the cuts with “an increasingly challenging economic climate and softening advertising demand”, resulted in revenues that came in at the low end of the firm’s previously published outlook.

The company reported revenue of $1.78 billion and a net profit of $8.9 million. While sales inched up by 1%, the profit was down about 80% from $43.7 million in Q3 of 2008.