Yahoo to cut 1,700 workers as CEO tries to save her own job

SAN FRANCISCO -- Yahoo is laying off about 1,700 employees and shedding some of its excess baggage in a shake-up likely to determine whether CEO Marissa Mayer can save her own job.

See Full Article

The long-anticipated purge, announced Tuesday, will jettison about 15 per cent of Yahoo's workforce along with an assortment of services that Mayer decided aren't worth the time and money that the Internet company has been putting into them.

The cost-cutting is designed to save about $400 million annually to help offset a steep decline in net revenue this year.

Mayer also hopes to sell some of Yahoo's patents, real estate and other holdings for $1 billion to $3 billion.

Products to be dumped include Yahoo Games, Yahoo TV and some of the digital magazines that Mayer started as CEO. She will also close offices in Dubai, United Arab Emirates; Mexico City; Buenos Aires, Argentina; Madrid, Spain; and Milan, Italy.

In an apparent concession to frustrated shareholders, Mayer also said Yahoo's board will mull "strategic alternatives" that could result in the sale of all the company's Internet operations. Analysts have speculated that Verizon, AT&T and Comcast might be interested in buying Yahoo's main business, despite years of deterioration.

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."

Shareholders have questioned whether she has figured out how to revive the Internet company's growth after three-and-half years of futility. Yahoo's stock shed 78 cents, or 2 per cent, to $28.28 extended trading after details of Mayer's latest turnaround attempt came out. The stock has fallen by more than 40 per cent since the end of 2014 as investors' confidence in Mayer has faded.

"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. "At this point, it needs to be managed for maintenance or very slow growth. Marissa is more of a visionary whose background lends itself to a more ambitious strategy. I don't think she is the one to navigate the company through job cuts or a restructuring."

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

Mayer, a former rising star at Google who helped Google eclipse Yahoo, defended her performance.

"Yahoo is a far stronger, more modern company that it was three-and-half years ago," she said in a video presentation Tuesday.

She also lashed out at reports that Yahoo spent $7 million on its holiday parties in December, labeling the figure as an "untruth" that is more than three times the actual cost of the festivities.

Even after the mass firings are completed by the end of March, Yahoo will still have about 9,000 workers -- three times the roughly 3,000 people that SpringOwl believes the company should be employing, based on its steadily declining revenue.

"We would like to see a higher stock price, and we think Marissa and her current management team have become a hindrance to that," said Eric Jackson, SpringOwl's managing director. He declined to disclose the size of SpringOwl's Yahoo investment.

Yahoo's revenue has been shrinking through most of Mayer's reign, even though she has spent more than $3 billion buying more than 40 companies, while bringing in new talent and developing mobile applications and other services designed to attract more traffic and advertisers.

The decline has persisted while advertisers have been steadily increasing their digital marketing efforts. Most of that money has been flowing to Google and Facebook -- two companies once far smaller than the now 20-year-old Yahoo Inc.

Yahoo's fourth-quarter report provided fresh evidence of the company's deterioration. After subtracting ad commissions, revenue plunged 15 per cent to $1 billion compared with the previous year -- the biggest drop since Mayer became CEO in July 2012. Things continue to look bleak, as Yahoo forecast a net revenue decline of 12 per cent to 17 per cent this year.

The Sunnyvale, California, company reported a fourth-quarter loss of $4.4 billion, reflecting the eroding value of its services. 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.



Advertisements

Latest Economic News

  • Broker, agent who worked with subsidiary of Home Capital disciplined

    Economic CBC News
    An Ontario regulator says it has imposed disciplinary actions against a mortgage broker and agent who worked with Home Trust Co., a subsidiary of Home Capital Group, over their handling of mortgages. The Financial Services Commission of Ontario (FSCO) says it conducted a review of 45 mortgage brokers and agents that Home Capital cut ties with after they were accused of falsifying income information several years ago. Source
  • Calgary man on lam in Mexico sentenced to 3 years in $27M mortgage fraud

    Economic CTV News
    CALGARY -- A Calgary man who was arrested after being on the lam for two years in Mexico for his part in a $27 million mortgage fraud has been sentenced to three years in prison. Source
  • Nortel Canada to start paying billions to creditors

    Economic CBC News
    Nortel Canada's long-suffering creditors will finally begin to receive their share of more than US$4 billion to be distributed under a plan approved in January, eight years after the former technology titan began bankruptcy proceedings. Nortel Networks Corp. Source
  • Nortel Canada to start paying billions to creditors; first instalment by July

    Economic CTV News
    TORONTO - Nortel Canada's long-suffering creditors will finally begin to receive their share of more than US$4 billion to be distributed under a plan approved in January, eight years after the former technology titan began bankruptcy proceedings. Source
  • Que. construction strike: Day 3 kicks off with little to show at bargaining table

    Economic CTV News
    MONTREAL -- There is little progress to report at the table as Quebec's construction strike enters Day 3. Eric Cote, a spokesman for one association of employers, says negotiations resumed late Thursday and that representatives for his group emerged early today suggesting they were a waste of time. Source
  • Ford's ex-CEO leaves company with $51.1M US

    Economic CBC News
    Ford's former CEO Mark Fields is leaving the company with an estimated $51.1 million US in cash, stock awards and pension benefits. Fields, 56, retired earlier this week after three years as CEO. Ford made record profits during his tenure but its stock price dropped nearly 40 per cent on investors' concerns about the company's future. Source
  • Ford's ex-CEO leaves company with US$51.1 million

    Economic CTV News
    DETROIT -- Ford's former CEO Mark Fields is leaving the company with an estimated US$51.1 million in cash, stock awards and pension benefits. Fields, 56, retired earlier this week after three years as CEO. Source
  • Rising program expenses propel fed 2016-17 deficit to $21.8B: preliminary estimate

    Economic CBC News
    A preliminary analysis of the federal books suggests the government ran a 2016-17 deficit of $21.8 billion to put the Liberals close to their projection for the fiscal year. The Trudeau government's spring budget projected a shortfall of $23 billion for the fiscal year, without counting a $3-billion risk adjustment added to the accounting framework. Source
  • Feds run $21.8B deficit in 16-17, putting them close to target: early analysis

    Economic CBC News
    A preliminary analysis of the federal books suggests the government ran a 2016-17 deficit of $21.8 billion to put the Liberals close to their projection for the fiscal year. The Trudeau government's spring budget projected a shortfall of $23 billion for the fiscal year, without counting a $3-billion risk adjustment added to the accounting framework. Source
  • U.S. GDP reading for start of year revised upward, but still weak

    Economic CBC News
    The U.S. economy started 2017 out with a whimper, but it wasn't quite as weak as first thought. The government revised up its January-March growth reading to a rate of 1.2 per cent — better than an earlier estimate of 0.7 per cent but well below President Donald Trump's ambitious growth targets. Source