Fallen internet giant Yahoo announced a strategy that will focus on a number of key areas, including its mobile business, with the company teeing up job cuts and asset sales.
In addition to backing the turnaround plan, chairman Maynard Webb said: “The Board also believes that exploring additional strategic alternatives, in parallel to the execution of the management plan, is in the best interest of our shareholders.”
Although not a direct reference, the statement was taken as a sign that the board could consider the disposal of some formerly core internet businesses. Certainly, the focus is now to grow revenues through its so-called Mavens (mobile, video, native and social).
The company wants to see revenue from these activities reach $1.8 billion this year, an increase of 8 per cent.
“We are extremely proud of the billion dollar plus business we have built in mobile, video, native, and social. Our strategic bets in Mavens have enabled us build an entirely new, forward-leaning business of tremendous scale and growth in just three years,” said Marissa Meyer, CEO.
However, its Q4 results did not exactly paint such a picture.
Although revenue crept up by 1.6 per cent to $1.27 billion, the company reported a loss of $4.44 billion, compared with net earnings of $166 million in the year ago quarter.
This was the result of a $4.5 billion charge relating to the writedown in the value of its businesses, including US & Canada, Europe, Latin America and Tumblr operations.
However, thanks to its new strategy, the company’s aim is to improve profitability to reach what it describes as an adjusted EBITDA run rate of about $1 billion by H2 2016. It will also aim to reduce opex by more than $400 million by the end of the year.
Looking forward, the company will focus on three main consumer platforms, Search, Mail and Tumblr, and four “digital content strongholds” in the form of News, Sports, Finance and Lifestyle.
For search, it identified mobile as the biggest opportunity, stating it will “shift most of the resources in this area toward more forward-leaning mobile search investments, positioning it to redefine search for mobile devices”.
According to the Wall Street Journal, possible buyers of assets on the block include Verizon, News Corp and private equity firm TPG. In addition, Yahoo aims to raise $1 billion from selling off assets such as non-strategic patents and real estate.
Its workforce, however, should be prepared for some pain as the company plans to reduce its workforce by roughly 15 percent and close five offices in Dubai, Mexico City, Buenos Aires, Madrid, and Milan, subject to local laws and consultation processes.
The axe is expected to fall mostly in Q1, but by the end of 2016 the company anticipates having about 9,000 employees and fewer than 1,000 contractors. This represents a workforce that is roughly 42 percent smaller than it was in 2012, a striking reduction.