Yahoo on Tuesday said that 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 $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 $1.27 billion.
In a statement, Yahoo said that 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 that 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 that 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.
The plan is intended to drive growth in Yahoo’s mobile, video, social and native ad offerings, a group of products which Mayer refers to as Mavens. Tuning offerings for mobile Internet users will be at the forefront as Yahoo focuses on its search, email, and online magazines, according to Mayer.
Online discovery, communication, and differentiated digital content are “what make Yahoo Yahoo,” Mayer said. Streamlining the company and putting it on a trajectory for improved earnings would also make it a more attractive acquisition.
Yahoo said it will reduce operating expenses by more than $400 million by the end of the year. The company will cut its workforce by about 15 percent, or approximately 1,500 people, and closing offices in Dubai, Mexico City, Buenos Aires, Madrid and Milan.
Yahoo expects that by the end of this year it will have approximately 9,000 employees and fewer than 1,000 contractors. “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 percent to $28.62 in trades that followed the close of market on Tuesday.