By Miguel Helft
Published: January 29, 2008
SAN FRANCISCO — Yahoo said Tuesday that it would cut 1,000 jobs from its 14,300-member work force by mid-February in an effort to cut costs and focus on its most important businesses.
The company disclosed the cuts during a discussion of its fourth-quarter earnings and a forecast of continued tough times ahead. The company did not specify which areas of the company would suffer layoffs.
Yahoo executives also said that the company planned to invest heavily in some areas, and that laid-off employees would be allowed to apply for jobs in those areas. The net effect on head count at the company was not clear.
“We are going to have to see how that is going to play out,” said John Aiken, an analyst with Majestic Research, a New York investment analysis firm.
Yahoo said its fourth-quarter net income fell to $206 million, a 23-percent decline from $269 million in the same quarter a year ago, as the company continued to struggle to compete with Google and others.
Yahoo said sales grew 8 percent to $1.8 billion, while revenues, excluding commissions paid to certain advertising partners, were $1.4 billion, in line with analysts’ expectations.
While Yahoo’s profit for the quarter topped analysts’ projections, the company warned analysts of continued hard times ahead. Investors appeared disappointed, and Yahoo shares fell nearly 10 percent in after-hours trading.
“While we will continue to face headwinds this year, we believe that the moves we are making will help us exit 2008 stronger and more competitive and return to higher levels of operating-cash-flow growth in 2009,” Jerry Yang, Yahoo’s chief executive, said in a statement.
The company also said it had renegotiated a lucrative partnership with AT&T, but it did not provide financial details of the new agreement. And Yahoo said it had appointed Aristotle Balogh, 43, as its chief technology officer, filling a key post that had been vacant for several months since the departure of Farzad Nazem. Mr. Balogh had been chief technology officer at the online security firm VeriSign.
Net income was 15 cents a share, down from 19 cents in the period a year ago. Wall Street analysts, on average, expected Yahoo to report earnings of 11 cents a shares on revenue, according to Thomson Financial.
Many analysts were waiting to hear whether Mr. Yang, the Yahoo co-founder who became chief executive last summer amid growing shareholder discontent, would announce more aggressive measures to turn around the Internet company.
In recent weeks, investors have grown increasingly concerned that the economic and financial market downturn could further hurt Yahoo’s prospects in 2008.
Investors and many Yahoo insiders have complained for more than a year that in its attempt to amass a huge audience, the company had become overextended and needed to narrow its focus.
After a strategic review of Yahoo’s business in the fall, Mr. Yang agreed with that assessment and said Yahoo would narrow its focus on three priorities: becoming a starting point for the most consumers on the Web; making the company a top choice for marketers seeking to place ads not only on Yahoo’s properties but also on sites across the Web; and opening up Yahoo’s technology infrastructure to third-party programmers and publishers.
But analysts say Mr. Yang has been clearer about what Yahoo will focus on than on what it will no longer do. The company has said it will begin to eliminate or consolidate some areas of its Internet portal, like photos, auctions and Yahoo 360, an unsuccessful social network, but those cuts have been modest.
For much of the past two years, Yahoo has been outrun by Google, whose lead in Internet search and search advertising has grown. Meanwhile, Yahoo has faced growing competition from MySpace, Facebook and other social networks, whose audiences have grown at a fast clip.
In December, Yahoo accounted for just 17.7 percent of searches in the United States, down from 19.9 percent in August, according to Nielsen/NetRatings. In the same period, Google’s share of searches grew from 53.6 percent to 56.3 percent.
Source: NYT
Yahoo Will Cut 1,000 Jobs
