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Yahoo opens door to deal, unveils big job cuts
[SAN FRANCISCO] Yahoo on Tuesday said it is cutting 15 per cent of its workforce and narrowing its focus as it explores "strategic alternatives" for the future of the faded Internet star.
The announcement, coming with the release of a big quarterly loss, offered the first sign that Yahoo may be open to a sale or merger after years of struggling to regain its former glory.
The California company reported a loss of US$4.43 billion in the final three months of last year, due mostly to lowering the value of its US, Canada, Europe, Latin America and Tumblr units.
Revenue was up marginally from a year ago at US$1.27 billion.
Yahoo said in a statement it was launching "an aggressive strategic plan to simplify the company, narrowing its focus on areas of strength to better fuel growth." At the same time, it said it was looking at "additional strategic alternatives," suggesting it could seek a deal to sell or merge the company.
Yahoo chief executive Marissa Mayer said she is launching "a strong plan calling for bold shifts in products and in resources" to help revive the company's fortunes.
She maintained that the plan would "dramatically brighten our future and improve our competitiveness, and attractiveness to users, advertisers, and partners."
The plan is intended to drive growth in Yahoo's mobile, video, social and "native" offerings for advertising, a group of products which Mayer refers to as "Mavens."
Yahoo said it will reduce operating expenses by more than US$400 million by the end of the year.
Cuts at the company will include cutting its workforce by about 15 per cent, or approximately 1,500 people, and closing offices in Dubai, Mexico City, Buenos Aires, Madrid and Milan.
Most of the cuts were expected top take place this quarter.
Yahoo expects that by the end of this year it will have approximately 9,000 employees and fewer than 1,000 contractors.
That figure is less than half the number of workers that were on Yahoo's payroll in 2012, according to the company.
"Yahoo does not take this decision lightly and will make every effort to handle the process with thoughtfulness, transparency, and compassion," it said in a release.
Yahoo shares were down slightly more than one per cent to US$28.60 in trades that followed the close of market on Tuesday.
Maynard Webb, Yahoo chairman, said that the board is "committed to the turnaround efforts of the management team" but must also look at other options.
"The board also believes that exploring additional strategic alternatives, in parallel to the execution of the management plan, is in the best interest of our shareholders," Mr Webb said, adding that Yahoo would "engage on qualified strategic proposals."
The restructuring plan will allow Yahoo to focus on mail, search and the Tumblr blogging platform for consumers, as well as "deep vertical utilities" identified as news, sports, finance and lifestyle. Yahoo will also focus on two advertising units known as Gemini and BrightRoll.
Yahoo is also expect to sell off non-strategic assets including real estate, generating some US$1 billion.
The company plans to proceed with its plan to separate the core business from its stake in Chinese online giant Alibaba.
Last year, Yahoo revised the plan for tax reasons, deciding to spin off the core operations in a move that could open it up to a sale or other strategic deal.