Ya­hoo to cut 1,700 work­ers

The Pak Banker - - COMPANIES/BOSS -

Ya­hoo is lay­ing off about 1,700 em­ploy­ees and shed­ding some of its ex­cess bag­gage in a shake-up likely to de­ter­mine whether CEO Marissa Mayer can save her own job.

The long-an­tic­i­pated purge, an­nounced on Tues­day, will jet­ti­son about 15 per­cent of Ya­hoo's work­force along with an as­sort­ment of ser­vices that Mayer de­cided aren't worth the time and money that the In­ter­net com­pany has been putting into them. The cost-cut­ting is de­signed to save about $400 mil­lion an­nu­ally to help off­set a steep de­cline in net rev­enue this year.

Mayer also hopes to sell some of Ya­hoo's pa­tents, real es­tate and other hold­ings for $1 bil­lion to $3 bil­lion. Prod­ucts to be dumped in­clude Ya­hoo Games, Ya­hoo TV and some of the dig­i­tal mag­a­zines that Mayer started as CEO. She will also close of­fices in Dubai, Mex­ico City, Buenos Aires, Madrid and Mi­lan.

In an ap­par­ent con­ces­sion to frus­trated share­hold­ers, Mayer also said Ya­hoo's board will mull "strate­gic al­ter­na­tives" that could re­sult in the sale of all the com­pany's In­ter­net op­er­a­tions. An­a­lysts have spec­u­lated that Ver­i­zon, AT&T and Com­cast might be in­ter­ested in buy­ing Ya­hoo's main busi­ness, de­spite years of de­te­ri­o­ra­tion. Mayer ex­pressed con­fi­dence that her plan to run Ya­hoo as a smaller, more fo­cused com­pany "will dra­mat­i­cally brighten our fu­ture and im­prove our com­pet­i­tive­ness and at­trac­tive­ness to users, ad­ver­tis­ers, and part­ners".

Share­hold­ers have ques­tioned whether she has fig­ured out how to re­vive the In­ter­net com­pany's growth af­ter three-and-a-half years of fu­til­ity. Ya­hoo's stock shed 34 cents to $28.72 in ex­tended trad­ing af­ter de­tails of Mayer's lat­est turn­around at­tempt came out. The stock has fallen by more than 40 per­cent since the end of 2014 as in­vestors' con­fi­dence in Mayer has faded.

"The in­vest­ment com­mu­nity has given up on this be­com­ing a res­ur­rec­tion story," said Dou­glas Melsheimer, man­ag­ing di­rec­tor of Bul­ger Part­ners, a tech­nol­ogy bank­ing and con­sult­ing firm. "At this point, it needs to be man­aged for main­te­nance or very slow growth. Marissa is more of a vi­sion­ary whose back­ground lends it­self to a more am­bi­tious strat­egy. I don't think she is the one to nav­i­gate the com­pany through job cuts or a re­struc­tur­ing."

Ken Gold­man, Ya­hoo's chief fi­nan­cial of­fi­cer, said he got a "neu­tral" re­ac­tion af­ter talk­ing to some in­vestors fol­low­ing Mayer's pre­sen­ta­tion. He also ac­knowl­edged that both Mayer and he had made some mis­takes that they are now try­ing to cor­rect with this over­haul.

"None of us are per­fect in all of our de­ci­sion-mak­ing, but I feel good about the plan that we put in place and be­lieve it's the right one," Gold­man told the As­so­ci­ated Press. Some of Ya­hoo's most out­spo­ken share­hold­ers, such as SpringOwl As­set Man­age­ment, al­ready have con­cluded that Mayer should be laid off, too. Mayer, a for­mer ris­ing star at Google who helped that com­pany eclipse Ya­hoo, de­fended her per­for­mance.

"Ya­hoo is a far stronger, more mod­ern com­pany than it was three­and-a-half years ago," she said in a video pre­sen­ta­tion on Tues­day. She also lashed out at re­ports that Ya­hoo spent $7 mil­lion on its hol­i­day par­ties in De­cem­ber, la­bel­ing the fig­ure as an "un­truth" that is more than three times the ac­tual cost of the fes­tiv­i­ties.

Even af­ter the mass fir­ings are com­pleted by the end of March, Ya­hoo will still have about 9,000 work­ers? three times the roughly 3,000 peo­ple that SpringOwl be­lieves the com­pany should be em­ploy­ing, based on its steadily de­clin­ing rev­enue.

"We would like to see a higher stock price, and we think Marissa and her cur­rent man­age­ment team have be­come a hin­drance to that," said Eric Jack­son, SpringOwl's man­ag­ing di­rec­tor. He de­clined to dis­close the size of SpringOwl's Ya­hoo in­vest­ment.

Ya­hoo's rev­enue has been shrink­ing through most of Mayer's reign, even though she has spent more than $3 bil­lion buy­ing more than 40 com­pa­nies, while bring­ing in new tal­ent and de­vel­op­ing mo­bile ap­pli­ca­tions and other ser­vices de­signed to at­tract more traf­fic and ad­ver­tis­ers.

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