Yahoo will lay off 15 per cent of its workforce, the group said on Tuesday, as it announced it would explore strategic alternatives that could include a sale of its core internet business amid pressure from investors.
The cost-cutting plan and sweeping strategic review marks Yahoo’s first direct admission that it might consider selling itself and comes as Marissa Mayer, chief executive, seeks to placate activist investors.
The board pledged to “engage on qualified strategic proposals” for its operating businesses, even as it continued with work on a reverse spin-off of its $25bn stake in Alibaba, the Chinese ecommerce group.
During its fourth-quarter earnings announcement Yahoo pledged to raise more than $1bn through asset disposals this year. The company will move away from its operations in Europe and Latin America, Ms Mayer said, and narrow its geographic focus to North America, the UK, Germany, Hong Kong and Taiwan.
The streamlining would lead to a fall in revenues in 2016, and Yahoo forecast losses for the first quarter of this year.
Some Yahoo shareholders said the proposals did not go far enough.
“We believe the strategic plan does not fully address the core issues which have destroyed shareholder value,” said a spokesperson for Spring Owl, a fund that holds Yahoo shares.
He cited poor capital allocation, bad strategic partnerships and out-of-control spending as areas for concern.
Some investors have been pressing for an outright sale of the company, and several private equity firms have been exploring a possible purchase of Yahoo’s internet business. Telecoms companies including Verizon and AT&T, and digital media groups such as IAC, are also believed to be examining Yahoo’s assets.
Yahoo said it expected to raise between $1bn and $3bn this year by selling off non-core assets such as real estate and patents. It plans to shut down several products, including Games and Smart TV, as it fires 1,400 staff.
Mayer has come under growing pressure from unhappy investors as she has struggled to revive Yahoo’s fortunes. She has pledged to focus on the core business of internet advertising, and restore the company to growth — a goal it has not met.
Yahoo reported fourth-quarter revenues of $1.3bn, slightly higher than analysts expected, but flat from the year before.
Yahoo initially planned to spin off its stake in Alibaba but reversed course after US tax authorities declined to rubber stamp the deal in advance, raising the possibility of a hefty tax bill. Instead, Yahoo said in December that it would spin off its internet business, which makes money by selling ads in search results and other online media.
The company said on Tuesday that this reverse spin-off would probably take another nine to 12 months because of its complex nature.
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