Yahoo to Cut 15% Employment, Laying-Off 17,000 Workforce
Following announcement of $4.3 billion loss in fourth quarter of 2015, Yahoo announced its new strategic plan and to turn-around its business. That includes a 15% reduction of its manpower and closing down five offices.
Prior to the announcement, Los Angeles Times cited Mizuho Securities analyst Neil Doshi prediction in his Monday note to investors, "We believe [Mayer] will have to announce bold moves in order to appease activist shareholders as well as a growing list of unhappy current investors in the company."
However, Investors and shareholders are not impressed by the result, Yahoo shares down 1.7% to $29.08 at Tuesday's close in New York, bringing the decline for the year to 13 percent as Bloomberg reported.
CEO Marissa Mayer said in announcement of her strategic plan on Tuesday, "Today, we're announcing a strategic plan that we strongly believe will enable us to accelerate Yahoo's transformation. This is a strong plan calling for bold shifts in products and in resources."
SpringOwl Asset Management, one of the shareholder did not think her plan as adequate. As quoted by Reuters, the New York-based firm said, "We believe the strategic plan does not fully address the core issues which have destroyed shareholder value - poor capital allocation, bad strategic partnerships, out of control spending and a bloated workforce."
As part of its turn-around plan, Yahoo will close down five offices in Dubai, Mexico City, Buenos Aires, Madrid and Milan and lay-off its 17,000 employees. CEO Marissa Mayer will also plan to sell some of its Internet business, amidst struggling against the more well-prepared and well-equipped opponents such as Google and Facebook.
After the plan is executed, by the end of the year, Yahoo will only have approximately 9,000 employees and fewer than 1,000 contractors. This has been a 40% reduction of 2012 before Mayer was appointed CEO. The reduction are expected to cut $400 million of Yahoo's annual operating expenses.
Marissa Mayer took helm of Yahoo in 2012 and she determined to change Yahoo into profitability. However, many of her efforts to improve products and contents came fruitless, and only become a burden with futile attempts of expansion. Before Tuesday's announcement, Yahoo has already cut 30% of its workforce and closing down offices and sites in some regions.
Under her leadership, many top executives has left Yahoo. In December, Max Levchin departed in December, while Charles Schwab has just resigned from the board. This two directors resign in just two months showed her lack of leadership in steering the former 1990's Internet giant. Previously, exodus of top executives hit Yahoo in October 2015: development head Jackie Reses, marketing partnerships head Lisa Licht, chief information security officer Alex Stamos, senior vice president of advertising and data platforms Scott Burke.
CEO Marissa Mayer decision to cut another 15% of the workforce may also be another ineffective attempt to spinoff the company. As investors and shareholders are getting impatient with her performance, and continuous departure of her executive boards.