Yahoo To Cut 15 Per Cent Jobs, Close Several Units

Instead of selling its core business, Yahoo said in December that it would focus on spinning of its core business and its stake in Yahoo Japan to create a separate publicly traded company.

Despite spending billion buying a number of companies, changing the logo of the company and hiring media personalities that are A-list, Yahoo’s core advertising business on Internet has kept losing ground to the likes of Facebook and Google.

Activist investor Starboard Value LP in a letter to Yahoo last month ramped up pressure on the company, taking aim at Mayer and her leadership team and raising the prospect of a proxy battle. She has been struggling to define her strategy since she joined the firm three and a half year ago.

Yahoo’s share price is down 1.2% in after hours trading. Most of the job cuts are expected to be completed by the end of March.

“The investment community has given up on this becoming a resurrection story”, said Douglas Melsheimer, managing director of Bulger Partners, a technology banking and consulting firm. They expect these factors to also slow their fiscal year growth from the levels they earlier forecasted.

Word of looming job cuts came on the same day that a fired Yahoo employee filed a lawsuit in federal court in Silicon Valley arguing that the company’s job performance evaluation system is discriminatory and violates the law.

Some of Yahoo’s most outspoken shareholders, such as SpringOwl Asset Management, already have concluded that Mayer should be laid off, too.

But there’s one potential road out that might appease shareholders, activist investors, Yahoo’s board and Mayer alike: Bloomberg reports that Yahoo is reassessing whether to spin off its main Internet business.

Yahoo on Tuesday said 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. Yahoo took a $42 million writedown on original programming on Yahoo Screen including Community and Sin City Saints, it disclosed in October, which made its shuttering inevitable. Thus, decline was persistent for the ex-web pioneer at stock markets.

The Yahoo logo is shown at the company’s headquarters in Sunnyvale, California April 16, 2013.

Yahoo’s fourth-quarter report provided fresh evidence of the company’s deterioration.

The changes are created to increase revenue from what it calls “mavens”, for mobile, video, native and social advertising, to US$1.8 billion this year from US$1.66 billion in 2015, cut operating costs by US$400 million by the end of the year, and possibly generate more than US$1 billion from asset sales.