UPDATE: During its earnings call Tuesday, Yahoo confirmed it will cut about 15% of its workforce and announced plans to close five offices in Dubai, Mexico City, Buenos Aires, Madrid and Milan.
By the end of 2016, Yahoo expects to operate with about 9,000 employees and less than 1,000 contractors, which the company said will save it approximately $400 million per year.
In an effort to turn around its struggling business, Yahoo outlined a “strategic plan” to pare down the company and focus its business. The company will work to grow user engagement using its Search, Mail and Tumblr platforms, according to the company’s statement. It also plans to simplify its business to improve focus and “execution” on its products, further clarifying its priorities with stakeholders.
The company said it will explore divesting “non-strategic” assets, though it did not specify what they were. TechCrunch speculates that the company is signaling the potential sale of its core business.
Dive Brief:
- During Tuesday’s quarterly earnings call, Marissa Mayer, Yahoo’s chief executive, announced 15% job cuts and plans to shutter several business units.
- As of June 30, the company had about 11,000 employees. The cuts are expected to impact about 1,600 people.
- Yahoo’s cost cutting measures could make the company more attractive to potential buyers, amidst speculation that the company plans to sell off its core business.
Dive Insight:
Yahoo has been on shaky ground for quite some time, with investors pressing Yahoo to sell off its core internet business. Verizon has expressed interest in purchasing the core business, which includes its web portal and mail services, according to Reuters.
Instead of selling its core business, Yahoo said in December that it would focus on spinning of its core business and its stake in Yahoo Japan to create a separate publicly traded company. At the same time, the company announced it would not spin off its stake in Alibaba Group Holding Ltd.
Adding to Yahoo’s woes, on Monday a former employee filed a lawsuit challenging the company’s quarterly performance review policy, according to a New York Times report. Mayer installed the policy when she took the reins in 2012 and each quarter during their review, an employee is ranked on a scale of 1 to 5.
Now, Gregory Anderson, a former editor who was fired in November 2014, alleges that the company’s senior management “manipulated" the system to justify firing hundreds of people to help meet the company’s "financial goals," according the Times.
Anderson was fired along with about 600 Yahoo employees, which he said amounts to illegal mass layoffs as the company. According to California state law, if more than 50 employees at one location are laid off within 30 days, the company must give the workers at least 60 days of advance notice, according to the Times.
The company’s future is shrouded in uncertainty, and Mayer will have to take extreme actions to keep the Yahoo afloat.
