Yahoo Inc said on Tuesday it would consider "strategic
alternatives" for its core Internet business and cut about 15 percent of
its workforce, even as it continues with its plan to revamp the business and spin
it off. The announcement is the strongest sign yet that the board and Chief
Executive Marissa Mayer may be willing to sell the struggling Internet business
- essentially websites, email and online search - under growing pressure from
impatient shareholders. In an interview with Reuters, Mayer said the company
will entertain offers as they come but its first priority is the turnaround
plan. If it receives an offer this year, it was unlikely that the transaction
would be completed before the 9 to 12-month timeline projected for the
spin-off, she said.
The planned restructuring announced on Tuesday includes the
closure of offices in five locations, a paring down of its products, shifting
more resources to mobile search, and the sale of some non-strategic assets such
as real estate and patents. Investors were not immediately impressed, sending
Yahoo shares down 1.2 percent after hours. They have now fallen 36 percent over
the past 12 months.
The web pioneer's revenue peaked in 2008 and while it still
runs some of the world's most-read websites, it has been unable to keep up with
Alphabet Inc's Google and Facebook Inc in the battle for online advertisers. In
the rejig of its business, it will focus on three main consumer platforms,
Search, Mail and Tumblr, and four "digital content strongholds" in
the form of News, Sports, Finance and Lifestyle.
The changes are designed to increase mobile, video, native
and social advertising revenue 8 percent to $1.8 billion and cut operating
costs by $400 million this year. It is also aiming to generate $1 billion to $3
billion in asset sales. Mayer dismissed accusations of excessive spending,
saying a report of a $7 million bill for Yahoo's holiday party was exaggerated
by a factor of three. Yahoo's adjusted quarterly revenue tumbled 15 percent to
$1 billion after deducting fees paid to partner websites, as it struggles to
keep its share of online search and display advertising.
In the interview on Tuesday, Mayer said the company intends
to group its stake in Yahoo Japan with the main business, but would be open to
splitting it off depending on market feedback.
The company reported a loss of $4.43 billion, or $4.70 per
share, in the quarter, due to a large write-down to account for the lower value
of some units. That compared with net income of $166.3 million, or 17 cents per
share, a year earlier. Among the write-downs, the company took an impairment
charge of $230 million for Tumblr, the social blogging site for which it paid
$1.1 billion in 2013.
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