YAHOO! Inc, owner of the most-visited United States Website, will cut about 700 jobs, or five percent of its work force, as it reorganizes to compete with Google Inc, according to a person with knowledge of the plans.

The reductions to its work force of about 14,000 may be announced around the same time as it reports earnings next Tuesday, said the source, who declined to be identified because the cuts haven't been disclosed.

Yahoo spokeswoman May Petry declined to comment. In an earlier statement, the company said it will "eliminate some areas of the business."

Yahoo has reported seven straight quarters of declining profit as it lost Internet-search users to Google and faced competition from new rivals such as Facebook Inc and News Corp's MySpace. Yahoo Chief Executive Officer Jerry Yang began a reorganization after taking over from Terry Semel in June.

"The headcount went up without a clear sense of what the company was," Mike McGuire, an analyst with Gartner Inc in San Jose, California, told Bloomberg News. "A lot of Wall Street was taking Yang at his word when he said they were going to look at everything."

Henry Blodget, a former Merrill Lynch & Co analyst, said on his Silicon Alley Insider blog that Yahoo may cut 1,500 to 2,500 jobs.

Yahoo dropped as much as US$5.02, or 24 percent, to the equivalent of US$15.76 in German trading from Friday's close of US$20.78 in Nasdaq Stock Market trading. The stock traded at US$17.05 at 10:25am in Frankfurt. Before then, the stock had lost 11 percent this year in the US.

"Yahoo plans to invest in some areas, reduce emphasis in others, and eliminate some areas of the business that don't support the company's priorities," according to the statement from the Sunnyvale, California-based company.

In July, Yang told investors he would spend the next 100 days reviewing the company's business units and crafting a plan to "dramatically improve" performance.

Yahoo's sales rose 12 percent to US$1.77 billion in the third quarter, compared with a 19-percent gain a year earlier. Sales at Google gained 57 percent to US$4.23 billion.

While Yahoo draws more visitors than Google in the US, Google leads in the market for selling ads next to Internet search results. In November, Google accounted for 59 percent of search queries, compared with Yahoo's 22 percent, according to ComScore Inc.