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Yahoo to cut 15% of its workforce & explore options to sell core biz

Yahoo Office

Yahoo will be cutting 15% of its workforce, approximately 1,700 workers, and exit five offices in Dubai, Milan, Madrid, Buenos Aires and Mexico City. Yahoo also said that it will be exploring “strategic proposals” for Yahoo as the company is spinning off its investment in Alibaba from the operating core business. With this, Yahoo’s headcount will be reduced to about 9,000 employees and 1,000 contractors.

However, CEO Marissa Mayer remained optimistic about the company’s turnaround. Yahoo will be looking to cut operating expenses by $400 million and focus on its mobile, video, native and social initiatives.

Speaking on Yahoo’s Alibaba spin off, Maynard Webb, chairman of Yahoo’s board, said, “Separating our Alibaba stake from our operating business continues to be a primary focus, and our most direct path to value maximization. In addition to continuing work on the reverse spin, which we’ve discussed previously, we will engage on qualified strategic proposals,” Webb said.

Other divisions shut down

In March 2015, Yahoo shut down its office in Beijing, China, resulting in up to 300 job cuts. In February 2015, Yahoo India laid off over half of its editorial team based in Bangalore and about 35% of its editorial staff in Canada, which together represented about 100-200 jobs, citing global reorganization and restructuring. In October last year, Yahoo’s Software Development Centre in Bangalore saw around 600 layoffs as a part of its team consolidation worldwide.

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In June 2015, the company shuttered Yahoo Maps and Yahoo Pipes , GeoPlanet, PlaceSpotter APIs and some regional verticals.

Financials

Yahoo reported a net revenue of $1.27 billion for the quarter ended December 31, 2015, a marginal increase of 1.59% from $1.25 billion in the same quarter last year. Losses at the company ballooned to $4.53 billion compared to the net profit of $32 million in the same period last year. Losses were mainly on account of $4.46 billion goodwill impairment of its investments in Tumblr and its businesses in the US, Canada, Europe and Latin America.

Goodwill is an intangible asset that arises as a result of the acquisition of one company by another for a premium value. Yahoo is now correcting the value of its acquisition in Tumblr and the value of businesses in the respective geographies. In its release, Yahoo said:

The goodwill impairment resulted from a combination of factors, including decreases in our market capitalization, projected operating results and estimated future cash flows.

– Revenue from the mobile, video, native and social business stood at $472 million, an increase of  25.87% from $375 million in the same quarter last year.

– Mobile revenues came in at $291 million, a rise of 17.57% from $254 million in the same quarter last year.

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– Revenues from PC increased 6.77% to $931 million from $872 million in the same period last year.

– Gross search revenue was $866 million for the fourth quarter of 2015, a decrease of 7 percent compared to the fourth quarter of 2014.

Download: Earnings release and turnaround release

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