Mayer was also surprisingly blunt about the press reports that portrayed Yahoo as a lavish spending company, including the allegation that it spent more than $7 million on holiday parties and hundreds of millions on free food. Shareholders are not happy because Mayer has not produced the mass turnaround they had expected. “We don’t think there is anything in the announced restructuring and potential non core asset sales that will mollify activist investors”, Barclay’s Paul Vogel said in a note sent to investors February 3.
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CEO Marissa Meyer said in a statement: “This is a strong plan calling for bold shifts in products and resources”.
“Our strategic bets in Mavens have enabled us to build an entirely new, forward-leaning business of tremendous scale and growth in just three years”.
The company says the cutbacks alone could generate a billion dollars, however Yahoo shares continued to fall following the announcement. That sets the stage for faster innovation and quicker growth in key metrics like pageviews, according to Yahoo.
The firm also said that it will concentrate on Yahoo News, Sports, Finance and Lifestyle “in growth markets like the US, Canada, the UK, Germany, Hong Kong and Taiwan”. On the advertising side, Yahoo will hone in on two products: Brightroll (which offers programmatic buying and selling tools) and Gemini (which combines native ads and search). He declined to disclose the size of SpringOwl’s Yahoo investment.
“Yahoo can not win the hearts and minds of users and advertisers with a complicated portfolio of products and assets, especially if some no longer meet our aggressive growth goals or distract from growth products”, she said in the call. “But perhaps this plan will quiet the company sale rumors for the time being”.
Yahoo also said that it is planning job cuts. Alongside plans to cut the workforce, the company is closing offices in Madrid, Milan, Buenos Aires, Mexico City and Dubai as well as attempting to sell some services such as Yahoo TV in order to focus on its search, email and Tumblr operations. “This represents a workforce that is roughly 42 percent smaller than it was in 2012 and will result in savings in short term operating expense of $400 million annually”.
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Investors were expecting clarity into Yahoo’s plans when the company reported its fourth quarter earnings Tuesday (Feb. 2). “In addition to continuing work on the reverse spin, which we’ve discussed previously, we will engage on qualified strategic proposals”.
