Following approval of Verizon’s $4.5 billion acquisition of Yahoo’s core internet operations by Yahoo stockholders, the company will be cutting 15% of the 14,000 strong workforce, or about 2,100 jobs, across Yahoo and AOL globally, reports TechCrunch. Yahoo will be merged with Verizon’s AOL unit and and rebranded as Oath, with AOL CEO Tim Armstrong heading it. This was first reported by Recode, though at the time it had reported that up to 1000 jobs will be cut.
In February last year, Yahoo had cut 15% of its workforce, about 1,700 jobs, and exited five offices in Dubai, Milan, Madrid, Buenos Aires and Mexico City. Following this, Yahoo’s headcount reduced to about 9,000 employees and 1,000 contractors. While across 2015 the company had cut about 1,100 jobs, including 100-200 in February 2015, after Yahoo India laid off over half of its editorial team based in Bangalore and about 35% of its editorial staff in Canada, 300 in March 2015, after shut down of its office in Beijing, and 600 in October 2015 at Yahoo’s Software Development Centre in Bangalore, as a part of its worldwide team consolidation.
Whereas, AOL had pulled the plug on its India property AOL.in in 2011, following massive layoffs earlier in the year. Eventually in 2015, Verizon acquired AOL in a $4.4 billion all cash deal. Post acquisition, AOL became a wholly owned subsidiary of Verizon, while Armstrong continued to lead the company. It’s worth noting that at the time, Armstrong mentioned to CNN that there would be no job cuts (at AOL).
Trouble with Verizon deal
Yahoo’s Verizon deal had come under scrutiny after Yahoo revealed two data breaches (here and here) after the deal was confirmed. The two breaches together compromised the data of over 1.5 billion user accounts (not unique). During the first disclosed data breach, Verizon had said that it had a ‘reasonable basis’ to believe the incident represented a material impact that could allow it to withdraw from the $4.8 billion deal. Verizon was apparently looking to get a $1 billion discount on the Yahoo deal, and eventually in February this year it did cut the deal price by $350 million.
Yahoo financials
Yahoo reported a revenue of $1.47 billion for the quarter ended December 31, 2016 (Q4 FY16), up 5.7% from $1.27 billion in Q4 FY15. At the time, Yahoo had mentioned that it expected to close the Verizon deal in the second quarter of 2017. Revenue from the mobile, video, native and social (MAVENs) business stood at $590 million, an increase of 25% from $472 million in Q4 FY15, while mobile revenues came in at $459 million, a sequential rise of 57.7% from $291 million.
Overall page views to Yahoo’s core verticals had also dropped after the company reported the second breach. While the company attributed the drop in usage to the holiday season, page views failed to pick up after the holiday season, other than in the email category. Note that after the first breach the company reported an increase in page views on its properties, likely as a result of users logging in to check if they were hacked, and/or to migrate to other services.
