Report: Yahoo plans to eliminate over 20% of staff

Yahoo plans to cut about 20% of its staff — approximately 1,600 employees — as part of the company’s effort to overhaul its advertising unit, according to a new report.

The layoffs began Thursday morning, with more than 1,000 positions set to be eliminated by the end of the day, Axios reported. Another 8% of the workforce, or about 600 people, will be let go over the next six months.

The company’s ad tech unit will be hardest hit in the culling, with about 50% of those workers slated to lose their jobs.

Yahoo’s CEO, Jim Lanzone, emphasized the cuts are not a result of financial struggles, but rather, intentional changes aimed at bolstering its advertising arm, Yahoo for Business, which is not profitable. He said the strategic shift will be “tremendously beneficial for the profitability of Yahoo overall,” noting the company will be able “to go on offense” and funnel resources into more profitable parts of its business.

The Yahoo for Business segment’s strategy had “struggled to live up to our high standards across the entire stack,” a Yahoo spokesperson told CNBC.

The focus instead will primarily land on its flagship ad business called DSP, or demand-side platform, which allows advertisers to buy ads in an automated manner across multiple publisher websites. It will be renamed Yahoo Advertising.

“Our DSP is world class and does billions in revenue,” said Lanzone who expressed a desire to hire for more roles, and possibly make more acquisitions in a bid to grow the platform in the coming months. “The moves are meant to simplify and strengthen the good parts of the business, while sunsetting the rest.”

It was not immediately clear what benefits or severance laid-off employees would receive.

A slew of companies nationwide — from Goldman Sachs Group to Google’s parent company, Alphabet Inc to Disney — have similarly laid off thousands this year.