End of days for Technorati?

This has been all over the news and blogs — Technorati CEO David Sifry is stepping down as head huncho of the blog search engine. His new role will be Chairman of the Board and despite several months of searching for a new CEO, he’s moving on to the boardroom without a definite replacement.

What’s more surprising is that Technorati will be letting go laying off 8 of the around 45 people in the team. A sure sign that the start-up is already in the red and might be out of cash soon.

Although Sifry isn’t saying, CNet alludes this drastic move to stiff competition against Google Blog Search.

What does this really all mean? Obviously, the fund money is slowly drying up and Technorati hasn’t really found any other source of revenue except for advertising. Technorati has been serving around 12 million unique visitors a month and though I believe that is comparable to other start-ups like Digg (17 million), having a bloated workforce of 45 people may not really help for a positive cash flow.

I’d hate to see a really good company and promising service die a slow and agonizing death but at the end of the day, it’s the ROI that matters. What could practically turn this around is for Yahoo! to grab the opportunity and buy up Technorati at this point. I should make sense considering that Yahoo doesn’t have any blog specific search engine now. It may even be a good idea to add Technorati in the Yahoo! Portal too.