BusinessWeek TheBeat confirms the Layoffs at Friendster, scooped yesterday by Niall Kennedy (who announced massive layoffs initially, and then referred to a handful of people). What I had not heard (and was scooped by Jeremy) is that Scott Sassa, the Hollywood-originated CEO, will be leaving a a few weeks, and will be replaced by Taek Kwon, currently executive VP of product and technology at Citysearch.com.
Not surprising indeed, since Friendster has been for a long time in search of a way to monetize its (then) large audience (including a movie), and is facing strong competition from MySpace and others.
The other rumor is that the company is about to get additional financing, probably from current investors (Kleiner Perkins Caufield & Byers, Battery Ventures, Benchmark Capital). Difficult to see an upround coming through here, given that the last was at a post-money valuation of $53M.
No the real question: what is going to happen to the Friendster movie 
?
The first generation of social networking sites (Friendster, Tribe, ZeroDegrees, Orkut, …) have all gone through ups and downs (more downs) as they were pioneering in this new space – and not really figuring out a business model for themselves, besides advertising. Social networking is now an integral part of the fabric of Internet applications, but offers limited value in its own right – with a very quick decay of one’s interest.
Until Y!360 gets integrated in My Yahoo, or vice-versa, I will not feel compelled to visit it that often. Whilst it is a neat implementation, and useful integration of certain (still marginal) services, I don’t have any reason to come back to it again, and again – as I do with My Yahoo. But I remember the morning it was released: we were all super excited, until we had received our invitation, connected with our usual friends on that SN, had discovered the main features and posted about them. Kids with new toys, sort of.
At the end of the day, only LinkedIn still gets my "eyeballs", and generates value for me.