Yahoo announced that it would lay off 14% of its work force, about 2,000 employees in its latest cost-cutting move. This will be Yahoo’s sixth major layoff in the last four years. Yahoo expects to save $375 million annually from the layoffs. The company did not specify where the cuts would occur.
Colin Gillis, an analyst at BGC Partners, said, “Cutting head count is not executive genius. Margins are not the issue, revenue is. Is Yahoo going to grow? Or is this a downward path to zero? We’re still waiting for someone to show a vision for where this company is headed.”
Efforts to turn around the Internet company and make it relevant again have failed repeatedly. Shareholders have been frustrated by Yahoo’s over reliance on cost-cutting rather than identifying new areas for innovation and growth. Yahoo maintains one of the largest audiences on the Web with 700 million visitors. Yahoo Sports is the Web’s most-trafficked sports site. The company employs about 14,000 employees.
Yahoo’s product division, which oversees its consumer and advertising products, will see the most jobs cut, according to people inside Yahoo who were not authorized to speak publicly about the matter. Its media division, which has managed to attract premium advertising, will stay relatively intact, these people said. Mr. Gillis said, “They are investing in the areas of the company that people see and trying to cut back in areas where they are less visible.”
Yahoo’s issues have cost five chief executives their jobs over the past five years. Scott Thompson, Yahoo’s new chief executive, joined the company in January from PayPal. Under his leadership, Yahoo has shifted its focus to investing in innovative products and new blockbuster sites that will attract millions of visitors to Yahoo and entice advertisers to come back.
Yahoo’s negotiations over the sale of Yahoo’s assets in Asia with the Alibaba Group of China and Softbank of Japan have stalled over breakup fees and the value of Yahoo’s stake in Alibaba. The deal, which included a 35% stake in Yahoo Japan and a 40% stake in Alibaba, is estimated to be worth up to $17 billion. The capital from the deal was to be used to refocus its operations in the United States.