“Today, we’re announcing a strategic plan that we strongly believe will enable us to accelerate Yahoo’s transformation”.
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In a statement, Yahoo said the lay-offs would save the company $400 million annually.
For the fourth quarter, analysts expect Yahoo to report revenue of US$1.18 billion and earnings per share of 12.5 cents, according to Thomson Reuters I/B/E/S. Last quarter’s revenues and EPS both missed analysts’ estimates. Yahoo cited mobile search as its largest opportunity and said it would move most of its resources toward forward-leaning investments that differentiate its product in that space.
The changes are created to increase mobile, video, native and social advertising revenue 8% to $1.8 billion and cut operating costs by $400m this year.
With her new plan, Marissa Mayer – CEO of Yahoo – wants to focus on Search, Mail and Tumblr as well as News, Sports, Finance and Lifestyle in “growth markets” such as the US, Canada, UK, Germany, Hong Kong, and Taiwan. A year earlier, the company generated a net income of $166.3 million, or $.17 per share. “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. She did not mention any specific services, but said that they may be worth about $1 billion.
Ms Mayer proposed in December that Yahoo spin off its main business after it abandoned efforts to sell its Alibaba stake.
“In 2016, a smaller product portfolio emphasizing Yahoo’s core strengths will yield better focus, execution, and ultimately clearer value to shareholders, advertisers and users”, Yahoo said.
At the peak of Yahoo’s growth in 2007, the company had 14,300 staffers on its rolls.
So far Yahoo is set to shut down some of their own online magazines, their smart TV business, as well as online games sites. After subtracting ad commissions, revenue plunged 15 percent to $1 billion compared with the previous year – the biggest drop since Mayer became CEO in July 2012.
Charles Schwab and Max Levchin both recently resigned from the board, and it would seem that Mayer is putting on a good face before she throws dresses this pig up for auction.
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“Our hope is that Yahoo is only revealing half of the story, and that their master plan is not just to cut their way to growth”, said Steve Beck, managing partner at cg42, a management consultancy firm.
