Yahoo looks to save £278m annually as Internet business sale is mulled over
Yahoo is letting go 15 percent of its workforce as boss Marissa Mayer looks to implement an “aggressive strategic plan” for growth.
The layoffs will result in savings of $400 million (£292m) annually, said Yahoo, as the company also prepares to close five offices around the world, including Dubai, Madrid, and Milan.
Yahoo said in a statement that the 15 percent cull will take place in the first quarter, but by the end of 2016, the company only have around 9,000 employees.
“Today, we’re announcing a strategic plan that we strongly believe will enable us to accelerate Yahoo’s transformation,” said Marissa Mayer, Yahoo CEO.
The job cuts will leave Yahoo with a workforce more than 40 percent smaller than it was 2012 as the company fights to stay afloat in a rapidly changing market.
Mayer said that Yahoo is proud of the business it as built in mobile, video, native and social, and that it has built “an entirely new, forward-leaning business of tremendous scale and growth in just three years”.
“This is a strong plan calling for bold shifts in products and in resources,” she said.
“The plan announced today builds from that achievement and will dramatically brighten our future and improve our competitiveness, and attractiveness to users, advertisers, and partners.”
Rumours have been in the pipeline for months now regarding a sale of Yahoo’s core internet business, with Reuters sources claiming said that several potential buyers have actually been turned away by Yahoo.
No announcement of a sale came on Tuesday, but Yahoo reiterated that it could explore strategic alternatives that would include a sale of its internet division.
It was last December when Yahoo announced that the company won’t be spinning off its holdings in Alibaba. According to Yahoo’s board of directors, the decision came after consideration of how to best drive long-term value for its shareholders.
Yahoo said in a statement that Tuesday’s strategic plan aims to “explore non-strategic asset divestitures that, if consummated, could generate in excess of $1 billion in cash, and deliver increased value to shareholders, advertisers, and the more than one billion people who use Yahoo’s products and services”.
Maynard Webb, Yahoo’s Chairman of the Board, said: “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.
“Separating our Alibaba stake from our operating business continues to be a primary focus, and our most direct path to value maximization. In addition to continuing work on the reverse spin, which we’ve discussed previously, we will engage on qualified strategic proposals.”
Yahoo said that in 2016, the company will attempt to grow its user base, which should result in improved revenues and market opportunities.
For consumer products, Yahoo will focus on its Search, Mail, and Tumblr social media division. Its four verticals; news, sports, finance, and lifestyle, will be pushed in the US, Canada, UK, Germany, Hong Kong, and Taiwan.
The company said that for advertising, mobile search is the biggest opportunity, and Yahoo will shift resources in this area to a more “forward-leaning” mobile agenda.
“Yahoo is expected to return to modest and accelerating growth in 2017 and 2018,” said Yahoo in the statement. “Yahoo’s leadership and Board together believe that by taking these steps, the Company will more quickly realize a significant and positive impact on the trajectory of its transformation.”
The company also reported its fourth quarter results on Tuesday, maintaining its barely profitable trajectory.
Revenue hit $1.27 billion (£880m), up from $1.25 billion the previous year.