Yahoo Reports Earnings, Will Trim 15 Percent of Workforce
About 1,700 of 11,000 full-time employees will lose their jobs over the next several months as the company becomes smaller and more focused.Yahoo made public its Q4 and year-end 2015 financial results February 2, and as had been reported a day earlier, the Web search and services provider also submitted a plan to cut back 15 percent of its workforce to scale back operations and focus on fewer businesses. As a result, about 1,700 of 11,000 full-time employees will lose their jobs over the next several months at the 22-year-old Sunnyvale, Calif.-based Web pioneer, which was founded in January 1994 as Jerry (Yang) and David (Filo)'s guide to the World Wide Web, and then renamed Yahoo a year later. CEO and President Marissa Mayer said on a conference call to analysts, investors and journalists that the company also will close an unspecified number of business units and company projects to control costs. In an earlier move, Yahoo shut down its video portal on January 3. Quarterly Revenue Up Slightly
In the earnings news, Q4 revenue was reported to be $1.27 billion, an uptick from $1.25 billion in 2014. Operating earnings totaled 13 cents a share, which squared with Wall Street forecasts. However, Yahoo investors earned 30 cents per share in the fourth quarter of 2014.
Mavens (mobile, video, native, social) revenue represented 33 percent and 28 percent of traffic-driven revenue in the fourth quarter and full year 2014, respectively, and increased to 39 percent and 36 percent in the fourth quarter and full year 2015. In search, Yahoo continues to struggle, as it has since Google claimed market dominance 15 years ago. The company claimed only 2.1 percent of the $94 billion worldwide search market in 2015, and eMarketer said it expects the company to stay flat in that category this year. The company also said that one of its directors, Charles Schwab, has resigned from the board. The company ostensibly is being forced by activist investors who don't believe in the competitiveness of Yahoo anymore to sell off its main business and keep the corporate identity of Yahoo as a shell to manage the rest of its assets—which consist mostly of its $30 billion stake in Chinese online retail sales site Alibaba. What the Strategic Plan Entails Yahoo's strategic plan to simplify the company and "better fuel growth, drive revenue and increase efficiency in 2016 and beyond," revealed February 2, includes the following data points:
- Improve consumer and advertiser product quality and grow daily active users;
- Drive continued growth in revenue realized through Mavens (mobile, video, native and social) to $1.8 billion this year;
- Improve profitability to reach an adjusted run rate of approximately $1 billion by the second half of 2016;
- Reduce operating expenses by more than $400 million by the end of 2016;
- Limit GAAP revenue impact of product and regional exits to approximately $100 million;
- Explore nonstrategic asset divestitures that, if consummated, could generate in excess of $1 billion in cash, and
- Deliver increased value to shareholders, advertisers and the more than 1 billion people who use Yahoo's products and services.
- Yahoo's net reach (among all online universe) is 93 percent (229 million users).
- Mobile reach (among mobile users) is 77 percent (135.6 million mobile users).
- 15 percent of all time spent on digital devices has something to do with Yahoo, Inc.
- On average, Yahoo users spend 18 hours a month on any of Yahoo's properties.
- Yahoo Messenger and Yahoo Mail are Yahoo's most engaging properties (including both PC and mobile), with the average user spending 14 hours a month on the first and 13 hours a month on the second.
- Mobile Tumblr (blogs) and Yahoo Mail are the most engaging apps, with Tumblr users spending on average 3 hours a month using the app; Yahoo Mail users are spending about 2 hours a month on the app.
- Yahoo's flagship mobile app reach (among mobile users) is 26 percent (45.8 million users), Yahoo Mail app is 20 percent (34.8 million users), Tumblr is 18 percent (31.9 million users) and Yahoo Answers is 18 percent (31.8 million users).
- Yahoo Messenger (13 hours/month/user) and Tumblr (8 hours/month/user) engagement levels are higher than almost any of Google's properties, including popular properties such as YouTube (6 hours/month/user). Yahoo's challenge appears to lie in growing its user base to match that of Google; however, the current Yahoo user base is, on average, more loyal.