Confirming media reports since early March on impending job cuts, Internet giant Yahoo, Inc. (YHOO: Quote) said it will layoff about 2,000 employees, or 14 percent of its global workforce, as it revamps itself into a slimmer company.
The company on Wednesday added that it aims to be more profitable by focusing primarily on a "select group of core businesses."
"We are intensifying our efforts on our core businesses and redeploying resources to our most urgent priorities. Our goal is to get back to our core purpose - putting our users and advertisers first - and we are moving aggressively to achieve that goal," CEO Scott Thompson said in a statement.
The restructuring will see Yahoo ready itself to respond faster to customer needs and be more competitive in winning areas. Yahoo currently handles nearly 700 million users and thousands of advertisers on a regular basis.
"Unfortunately, reaching that goal requires the tough decision to eliminate positions. We deeply value our people and all they've contributed to Yahoo!," Thompson added.
The layoffs are said to to cover all the departments of Yahoo, including its marketing division and products group, which builds and maintains new Yahoo websites and mobile apps. It may also target research, marketing and public relations and other areas that are not considered core to Yahoo.
Yahoo estimates the restructuring will result in annualized savings of about $375 million. The company also currently expects to incur an estimated $125 million to $145 million in pretax cash charges relating to employee severance, with the majority of it being recognized in the second quarter.
The Internet giant, which offers most of its products free, requires more of ad revenues to boost its performance. Even though display advertising is a bright spot, the company is facing tough competition in search business from Google, Inc. (GOOG: Quote) and also from increasing popularity for social networking sites such as Facebook.
Yahoo continues to lose search market share to Google, and hasn't been able to increase revenues even as the Internet ad market expands by more than 20 percent annually.
As part of an ongoing strategic review process that started in early September after Carol Bartz was fired as CEO by Yahoo board, it named PayPal's President Scott Thompson to take over as the new CEO in early January. The current layoffs are part of a larger restructuring at Yahoo by Thompson.
Meanwhile, Google is also reportedly aiming for a major revamp of its search engine to maintain its competitive edge in search results, and enable it to better compete with traditional rivals like Microsoft Corp. (MSFT) and new entrants such as Apple Inc. (AAPL).
In Wednesday's regular trading session, YHOO is currently trading at $15.21, up $0.03 or 0.20% on a volume of 5.19 million shares. In the past 52-week period, the stock has been trading in a range of $11.09 to $18.84.
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by RTT Staff Writer
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