Yahoo Inc, under growing pressure from impatient investors, 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 Chief Executive Marissa Mayer may be willing to sell the struggling Internet business of Yahoo, which was a web pioneer in the 1990s but has since been eclipsed by Alphabet's Google and Facebook in the battle for online advertisers.
Yahoo shares, down about 36 percent over the past 12 months, fell a further 0.9 percent after hours.
"In a business that's kind of booming from an industry standpoint ... if the only thing you can come out and tell me is you're going to cut people to try to restore profitability through headcount, there's something huge missing here," said Martin Pyykkonen of Rosenblatt Securities.
Yahoo said it would close offices in five locations, pare down its products, shift more resources to mobile search, and sell some non-strategic assets such as real estate and patents.
It will have three main consumer-focused platforms, Search, Mail and Tumblr, and four verticals, or what it called "digital content strongholds," News, Sports, Finance and Lifestyle.
"We believe these changes will improve our course and institute a positive trajectory on our earnings," said Mayer on a call with analysts.
Yahoo on Tuesday also reported a 15-percent drop in adjusted quarterly revenue as it struggles to keep its share of online search and display advertising in the face of tough competition from Facebook Inc and Alphabet Inc's Google.
Mayer, who joined Yahoo in 2012 from Google, has been trying to revive the company's core media and online advertising business by spending heavily to draw more users to its websites.
She proposed in December that Yahoo spin off its main business, which includes its search engine, digital advertising units and its email service, after Yahoo abandoned efforts to sell its stake in Chinese e-commerce giant Alibaba Group Holding Ltd.
Yahoo's revenue - after deducting fees paid to partner websites - fell to $1.00 billion from $1.18 billion.
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.
Excluding items, Yahoo earned 13 cents per share, in line with analysts' average expectations.
Up to Tuesday's close of $29.06, Yahoo's shares had fallen 35 percent in the past 12 months.
(Reporting by Abhirup Roy and Anya George Tharakan in Bengaluru and Deborah M. Todd in San Francisco; Editing by Savio D'Souza and Bill Rigby)
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Published Date: Feb 03, 2016 04:45 am | Updated Date: Feb 03, 2016 04:45 am