Marissa Mayer has to cut 1,400 more jobs just to keep earnings flat, says Morgan Stanley

Analysts at Morgan Stanley think that Yahoo CEO Marissa Mayer needs to continue the spurt of layoffs that she started in October.

Mayer, under pressure to cut costs at Yahoo, has cut between 700 and 900 employees since last fall, but using their estimates of 2015 revenue, the analysts say that the company still needs to reduce its headcount by ~11% just to keep earnings flat between 2014 and 2015.

That's about ~1,400 more employees.

The problem, they write, is that Yahoo's headcount is too large relative to its revenue base. It has 1.4X more employees than Facebook, for example, with 37% of the revenue. It has 2.8X more employees than AOL.

"Yahoo's ~$370k revenue per employee is 74% less than Facebook, 70% less than Google, and even 34% less than AOL," analysts write. "This, in our views, speaks to the cost save opportunity."

While all those cuts would certainly reduce costs, the morale hit would likely be enormous, especially at a time when it already seems low.

Employees haven't been happy with the way all the recent layoffs have been conducted. Management has not been as transparent as it was when Mayer first took over. People feel like they don't know what's around the corner.

"The way these layoffs are being executed is really hurting morale," a source told Business Insider's Nicholas Carlson. "The public as well as the rest of Yahoo employees deserve to know what's going on. Executives are mostly mum on the issue and skirt around what's happening."

To Morgan Stanley, the 1,400 cuts is on the light side:

"This isn't a stretch and there could be more savings potential, as even then, Yahoo's revenue per employee would only be ~$420k, still 25% less than AOL."