CEO Marissa Mayer aims to cut $400 million in operating costs and sell off $1 billion in assets
Yahoo said Tuesday it would lay off 15 percent of its workforce and sell off non-core businesses, as the company reported fourth-quarter profit that met analyst expectations despite a slide in adjusted revenue.
Shares were down 1.4 percent in after-hours trading at $28.65. They have declined 34 percent in the last year through the market’s close.
CEO Marissa Mayer took the helm of Yahoo in 2012 from Google with ambitions to reignite the one-time Internet giant for the mobile age, aiming to revive growth with edgy start-up acquisitions like Tumblr, new apps and premium content and partnerships. But now in Mayer’s fourth year, her turnaround appears stalled and her year-long plan to sell one of the company’s most valuable investments — a sizable stake in Chinese e-commcerce giant Alibaba — was scuttled.
Mayer is also battling activist investor calls for her ouster. Activist hedge fund Starboard Value LP has demanded that Mayer and other executives resign.
Tuesday, Yahoo said it aims to cut $400 million in operating costs and divest itself of assets that could generate more than $1 billion in cash. It said it would shut down some digital magazine and exit legacy products, including games and smart TV, which have not met growth expectations.
Mayer indicated in October that the company would pursue a new strategy to “reset” its focus on mobile and on a slimmer operation overall.
The company also said that the board would be “exploring additional strategic alternatives” as the turnaround plan plays out. It said it would continuing working on the “reverse spin” Plan B for that stake it announced in December. But Yahoo said it will “engage on qualified strategic proposals,” code opening the door to talks if potential buyers come knocking.
For the quarter ended in December, Yahoo posted a loss of $4.43 billion, or $4.70 cents a share, compared with a year-earlier profit of $166.3 million, or 17 cents a share.
The latest period included a big write-down. On an adjusted basis, per-share earnings fell to 13 cents in the latest quarter from 30 a year earlier, matching the average analyst estimate.
Revenue rose 57 percent to $1.27 billion. Revenue excluding traffic acquisition costs fell 15 percent to $1 billion, less than the $1.186 billion analysts expected.