Yahoo aims for social, mobile users as it cuts 2,000 jobs
SAN FRANCISCO -- Yahoo CEO Scott Thompson wasn't kidding when he vowed to jostle the embattled Internet pioneer out of its slumber.
The company on Wednesday said it would slash 2,000 jobs, 14% of its workforce, and offer a blueprint of its "future direction" during its first-quarter earnings call on April 17. It is Yahoo's fifth significant layoff in five years.
The layoff, Yahoo's largest, is part of an audacious plan to realign the company and target mobile, social and younger users in pursuit of growing its advertising business — the lifeblood of the company.
"Today's actions are an important next step toward a bold, new Yahoo — smaller, nimbler, more profitable and better equipped to innovate as fast as our customers and our industry require," Thompson said in a statement. "Our goal is to get back to our core purpose — putting our users and advertisers first."
But Third Point, Yahoo's largest outside shareholder, said it was disappointed the cuts happened before Thompson laid out his strategic plan.
A slimmed-down Yahoo may be its only hope of surviving the onslaught from Google, Facebook and Microsoft that is eroding Yahoo's advertising and search business. Rumors had swirled for months that something would need to be done at the company. Thompson, the former president of online payment service PayPal, was installed in January to replace Carol Bartz, who was ousted from the CEO post last fall.
For Yahoo, "It's a question of what do you do with a cadaver? Where do you place your organs when you die?" says Damon Vickers, a money manager in Seattle who closely follows tech stocks. Yahoo "lost the search game to Google a long time ago."
Thompson, who was from PayPal in January, told USA TODAY then that Yahoo was going to change "at a high rate of speed, and then we get to change the game a little bit." He mentioned mobile, social media and TV as prime opportunities.
But Thompson inherited a battered brand that is losing advertising dollars to Google and Facebook and whose cachet in Silicon Valley and on Wall Street has diminished despite its enormous audience — 700 million online visitors per month — and a net profit of more than $1 billion on revenue of nearly $4.4 billion last year.
Under the announced layoffs, Yahoo expects to save $375 million a year. The company plans to take a pretax charge of $125 million to $145 million in the second quarter for severance costs.
Yahoo's stock inched up 9 cents, to $15.27, in trading Wednesday.
"They have problems, but still command a huge audience with e-mail service, Yahoo Finance and some of their sports and news content," says David Hallerman, an analyst at eMarketer. "The online space is filled with snobbery. Yahoo's audience is trending older than other social sites, which makes them not as hot or chic."
A beleaguered company
Yahoo's woes have some detractors comparing it to a hit cable show. If you guessed Mad Men, AMC's acerbic look at advertising in the 1960s, try again. It's The Walking Dead, an apocalyptic take on zombies in the 2010s.
The meandering company is increasingly likened to a corporate zombie in the tradition of the rags-to-riches-to-rags narrative of Sun Microsystems and AOL, both of which slipped from game changers to also-ran obscurity.
Popular Reads
ABC News Live