Financially adrift, Yahoo Inc. said Tuesday that it plans to cut 1,000 jobs as part of an effort to jolt its business back into shape. The announcement came as the Web portal reported a lackluster fourth quarter, during which profit fell 23 percent amid intensifying competition from rivals such as Google Inc. and declining ad spending by some customers caught in the subprime meltdown reports the San Francisco Chronicle.
Additionally, the company issued a tepid forecast for the rest of this year and made ample mention of “headwinds,” prompting an investor sell-off. Yahoo’s shares fell 10 percent in after-hours trading to $18.63, a low not reached since 2003.
Jobs cuts had been a foregone conclusion before Tuesday’s conference call with Wall Street analysts. The only question was how many people would go – 500 had been the rumor – and when.
The cuts represent 7 percent of the company’s workforce of 14,300. Employees are being invited to apply for an unknown number of new positions that are expected to open as the company expands areas that promise faster growth.
Yahoo didn’t provide any details about where the ax may fall, other than to say that targeted cuts would be made public in mid-February. The company has been on a mission to eliminate underperforming and redundant products in an effort to reduce costs, already jettisoning a dozen units including social networking service Yahoo 360, Yahoo Photos and Brand Universe, an advertising initiative.
When Jerry Yang, Yahoo’s chief executive, took the reins last year amid the turmoil, he made a point of saying that there would be no sacred cows in deciding what would live and what would die at the company. But until Tuesday, he had largely avoided major upheavals, eliciting criticism by some investors that he was being too gentle on the company he co-founded with partner David Filo 14 years ago as Stanford University graduate students.
Yang emphasized in a conference call that he and his team “are making profound, fundamental changes to virtually all aspects of our business.” He also said that “we’re not tinkering around,” citing a number of initiatives that he said will pay off by 2009.
Read it here: Yahoo to shed 1,000 jobs after profit slips