Yahoo to slash jobs, costs as quarterly profit falls
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Yahoo said today that it would lay off at least 10% of its workforce over the next few months to grapple with the fallout of the deepening economic crisis. A slumping online advertising market hammered Yahoo’s third-quarter profit, and the Internet company lowered its revenue forecast for the rest of the year.
At least 1,500 employees will lose their jobs as part of Yahoo’s cost-savings plan, which the Internet company hopes will reduce costs by $400 million a year. Yahoo is based in Sunnyvale, Calif., and also has offices in such cities as Santa Monica, San Francisco and New York. It didn’t say where the cuts would occur.
Yahoo shares lost 6.1%, or 79 cents, to $12.07 in regular trading then gained more than 5% in after-hours trading after the report.
The company said it would also achieve ‘substantial additional cost savings’ by addressing ‘structural inefficiencies.’ Earlier this year, Yahoo hired consultants Bain & Co. to help identify such cutbacks.
In a statement, Yahoo Chief Executive Jerry Yang said that economic conditions and online advertising had softened during the third quarter. Yahoo now projects that 2008 revenue will be between $7.18 billion and $7.38 billion, down from a forecast, issued three months ago, of $7.35 billion to $7.85 billion. Yang said the company would continue to balance investing in new products with keeping a tight grip on costs.
‘Despite a tough environment, we remain optimistic about Yahoo’s future,’ he said during a conference call with analysts.
But the third-quarter numbers tell a grim story. Yahoo earned $54.3 million, or 4 cents a share, a 64% decline from $151.3 million, or 11 cents a share, a year ago.
-- Jessica Guynn