* CEO sees Yahoo as smaller, nimbler, more profitable
* Facebook, Google cutting into business
* More details to be revealed April 17
* Yahoo shares down slightly
By Alexei Oreskovic and Sarah McBride
April 4 (Reuters) – Yahoo Inc will lay off 2,000
people, or 14 percent of its workforce, in its deepest round of
job cuts in years as new Chief Executive Scott Thompson tries to
jumpstart growth with a leaner, more agile company while saving
hundreds of millions of dollars.
Wall Street’s reaction was lukewarm, after two previous
Yahoo CEOs failed to find an answer to rivals like Web-search
leader Google and the Facebook social-networking site.
Sunnyvale, California-based Yahoo, which ended 2011 with
some 14,000 employees, said it would save $375 million annually
from the cuts and incur a pre-tax cash charge in the second
quarter of $125 million to $145 million.
The company declined to comment on severance details.
Some analysts were skeptical about the widely expected
layoffs, which weren’t accompanied by details of Yahoo’s broader
plan to revamp its business.
“You can’t cut your way to revenue growth,” said Colin
Gillis of BGC Partners. “What people want to see out of Yahoo is
… a plan and provision for revenue growth.”
Third Point, an activist hedge fund that is waging a proxy
fight to install a slate of handpicked directors on Yahoo’s
board, described the layoffs as “necessary.”
But the hedge fund, Yahoo’s largest shareholder with a 5.8
percent stake, said in a statement that it was “disappointed
that this round of cuts occurred before CEO Scott Thompson has
articulated his strategic plan for the company.”
Thompson, in all-staff memo obtained by Reuters, said the
changes would transform Yahoo into a leaner outfit that focuses
on its main businesses, which he identified as “core media and
communications,” “platforms” and “data.”
“The changes we’re announcing today will put our customers
first, allow us to move fast, and to get stuff done,” Thompson
said in the memo, adding that the changes would result in a
“smaller, nimbler, more profitable” company.
“We are intensifying our efforts on our core businesses and
redeploying resources to our most urgent priorities,” Thompson
wrote in the memo.
Macquarie Research’s Ben Schachter saw the layoffs as a
start in determining the new direction of the company.
“Scott Thompson is not there to tweak the business,”
Schachter said. “He saw something in the assets to make him
think there was potential.”
A Yahoo spokeswoman said that every organization within the
company was affected by the layoffs but that some groups were
affected more than others. She declined to specify the groups
most affected.
Yahoo said it would provide more details of its plans when
it releases first-quarter results on April 17.
The layoffs come as Yahoo’s revenue declines due to
competition from Google and Facebook. Last year, Yahoo’s revenue
totaled $4.98 billion, compared with Facebook’s $3.71 billion,
accomplished with just 3,200 employees.
Yahoo is also fighting a battle with hedge fund manager
Daniel Loeb.
Loeb, who runs Third Point, is seeking to appoint four new
directors to Yahoo’s board. Third Point, with a 5.8 percent
stake in Yahoo, is the company’s largest shareholder.
Yahoo’s shares ended down 0.6 percent $15.27 on the Nasdaq.
The Nasdaq market dropped nearly 1.5 percent.
