Yahoo announces 10% workforce reduction, office closings during Q4 earnings report
The digital media company Yahoo reported earnings today and the news coming out of the report might have been about revenue (OK in Q4, but down 15 percent for the year) were it not for a non-cash goodwill impairment charge. But that charge was rather… large.
But the real news is that the company will endure more layoffs as it struggles to turn itself around.
“Today, we’re announcing a strategic plan that we strongly believe will enable us to accelerate Yahoo’s transformation,” said Marissa Mayer, CEO of Yahoo. “This is a strong plan calling for bold shifts in products and in resources. We are extremely proud of the billion dollar plus business we have built in mobile, video, native, and social. Our strategic bets in Mavens have enabled us build an entirely new, forward-leaning business of tremendous scale and growth in just three years. The plan announced today builds from that achievement and will dramatically brighten our future and improve our competitiveness, and attractiveness to users, advertisers, and partners.”
Yahoo said it will reduce its workforce by 15 percent by the end of 2016, and close its offices in Dubai, Mexico City, Buenos Aires, Madrid, and Milan. These layoffs were expected after the company brought in consulting firm McKinsey, supposedly to get financial advice, but really to provide cover for managers to cowardly to say the decision to institute layoffs was their own (very common, I’m afraid).
Despite the bloodletting, investors are still angry. After the earnings report activist investor Starboard Value sent a new letter to Yahoo’s board demanding action. This is actually the fourth such letter from the firm to Yahoo.
You may recall that Starboard was equally active in its objections to the Meredith-Media General deal, complaining that a deal between broadcasters that involved print magazines did not make sense. Later a deal was struck between Media General and Nexstar Broadcasting Group.
There is still a good chance – actually probably a very good chance – that Yahoo is headed to a spin-off. In this case, it would be what is called a reverse spin off with the Yahoo assets spun off into a new company, with the Alibaba stake all the remains with the old company.
US stock markets tumbled today, with the Dow falling nearly 300 points, and the NASDAQ falling even more in percentage terms. The cause? Financial reporters are blaming continuing falls in the price of oil, which banks worry will lead to defaults on energy loans. European markets were also down sharply.