Yahoo to cut 1700; CEO tries to save own job

“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.

Yahoo on Tuesday announced it would consider a reverse spinoff and cut about 15 percent of its workforce as part of a restructuring to boost a sluggish core business.

It’s been a rocky road for Yahoo and for Mayer, who has been under growing pressure from shareholders to revitalize the company or sell it outright. She acknowledged the plan calls for bold shifts in both products and resources and signaled that the company would bet heavily on its billion-plus dollar business in mobile, video, native and social, also known as Mavens.

The company said it would cut about 15 per cent of its workforce and close offices in Madrid, Milan, Dubai, Mexico City and Buenos Aires.

Kenneth Goldman, CFO, said that through sales, closures and efficiency programmes Yahoo plans to reduce its headcount to approximately 9,000 people by the end of 2016 -meaning the loss of 1,590 jobs.

Yahoo is still considering how best to spin off its most valuable asset, its investment in Chinese e-commerce giant Alibaba. But that move also makes the core business easier to sell.

Some Yahoo! shareholders, including activist hedge fund Starboard Value, have been clamoring for an outright sale of the company.

The board of Yahoo will “engage on qualified strategic proposals”, the release said.

Most of that loss was due to a massive goodwill impairment charge, which basically means that Yahoo concluded its brands are worth much less than before. News of the plan had been trickling out ahead of today’s earnings. In after-hours trading, shares dropped nearly 2%.

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. However, it remains to be seen whether the company succeeds at rebounding as the Internet becomes increasingly mobile. Companies such as telecom major Verizon have shown interest in buying Yahoo. By the way, Yahoo earned 30 cents a share in the same period a year ago.

Specifically, Mayer said Yahoo would continue to focus on mail, search and its Tumblr service as global platforms and push its news, sports, finance and lifestyle verticals in particular geographic areas.

The announcement comes as Yahoo posted results for its fourth quarter that were in line with analysts’ expectations.