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Internet company announces another new turnaround plan as Q4 results show hefty net loss on multi-billion-dollar writedowns.
Yahoo CEO Marissa Mayer on Tuesday announced a series of sweeping measures as she seeks to turn the company around, including job cuts affecting in excess of 1,600 staff and up to $3 billion worth of asset sales.
The announcement came as the troubled Internet company posted a hefty net loss for the fourth quarter of the year on the back of a $4.46 billion writedown on the value of its assets.
Yahoo said it plans to cut its workforce by around 15% this year and will close five offices in Dubai, Mexico City, Buenos Aires, Madrid, and Milan. Yahoo had 11,000 staff as of mid-2015, which means it will shed approximately 1,650 staff, if its headcount has remained stable.
Indeed, the company said it expects to end the year with 9,000 employees and fewer than 1,000 contractors, giving it a workforce that is 42% smaller than it was in 2012. Mayer took up her post in July 2012, charged with stopping the rot at Yahoo.
Most of the cuts will come in the current quarter, Yahoo said. It expects to realise annual savings of $400 million as a result.
Another key tenet of the new turnaround plan will see Yahoo simplify its product portfolio this year, closing down certain businesses and exploring the sale of non-strategic assets. It will merge some digital magazines and close others, and will exit a number of legacy products, including games and smart TV, which it said have not met growth expectations.
As part of the simplification drive, Yahoo is considering selling off non-strategic patents, real estate and other non-core assets. It expects to generate $1 billion-$3 billion in cash from those divestments.
Yahoo also said it aims to boost user engagement, leaning heavily on its mobile search, Yahoo Mail and Tumblr platforms to do so. It will also continue to invest in its so-called ‘Mavens’ strategy, which stands for its key focus areas of mobile, video, native, and social.
"This is a strong plan calling for bold shifts in products and in resources," Mayer said.
"Our strategic bets in Mavens have enabled us to build an entirely new, forward-leaning business of tremendous scale and growth in just three years," she insisted. "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."
The success of the new plan, which Yahoo says will enable it to return to "modest and accelerating growth in 2017 and 2018," will be vital to the company’s fortunes.
Yahoo reported a net loss of $4.44 billion in the fourth quarter, having turned a profit of $166 million in the year-ago quarter. Its bottom line was hit by a $4.46 billion writedown linked to the value of assets in North America, Europe and Latin America, and Tumblr, the blogging platform it bought for $1.1 billion just under two years ago.
Adjusted EBITDA fell to $215 million from $409 million, while fourth-quarter revenue rose by 1.6% to $1.27 billion.
