In traditional executive-speak, Yahoo says the changes part of “an aggressive strategic plan to simplify the company, narrowing its focus on areas of strength to better fuel growth and drive revenue”.
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Interestingly enough, IB Times reported that Yahoo earned revenues worth $1.27 billion for 2015 Q4, beating the expectations of analysts who had predicted revenues worth $1.19 billion during the quarter.
“We believe the strategic plan does not fully address the core issues which have destroyed shareholder value – poor capital allocation, bad strategic partnerships, out of control spending and a bloated workforce”, a statement from one of Yahoo’s investors, SpringOwl Asset Management said.
The new plan will see Yahoo’s search business and Tumblr platform, become further oriented towards mobile users.
Mayer expressed confidence that her plan to run Yahoo as a smaller, more focused company “will dramatically brighten our future and improve our competitiveness, and attractiveness to users, advertisers, and partners”.
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.
Yahoo announced it would be shutting down Yahoo Games as well as Yahoo Smart TV and consolidating and closing some of its Digital Magazines.
Yahoo said that the move will leave the company with 9,000 employees worldwide and under 1,000 contractors.
Yahoo’s shares pared earlier losses after the Wall Street Journal first reported the news on the strategic alternatives.
Yahoo also said on Tuesday it was exploring strategic alternatives, along with pursuing a reverse spin-off of its Internet business.
Yahoo was founded at a time when search engines were more limited and people were still using dial-up modems. As a result from this plan, Tahoo is expected to lead to modest and accelerating growth in 2017 and 2018.
Revenue during the quarter before Mayer took over was $1.1 billion, not much below what it was last quarter.
When compared to other mobile advertising businesses like Facebook, it appears that Yahoo is having trouble in translating that base into revenue.
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Up to Tuesday’s close of $US29.06, Yahoo’s shares had fallen 35 per cent in the past 12 months. The amount included a $1.2 billion hit for acquisitions made under Mayer, including a $230 million decrease in the value of blogging service Tumblr, which the company bought for $1.1 billion in 2013.
