Yahoo profit falls; up to 1,500 jobs to be cut
SAN FRANCISCO — Battered by plunging profits and a sketchy economic outlook, Yahoo (YHOO) announced at least a 10% staff reduction on Tuesday.
The layoffs amount to up to 1,500 jobs.
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It is Yahoo's second significant round of layoffs this year. In January, the troubled Internet giant laid off 1,000 workers, but the cuts have done little to assuage investor confidence.
Yahoo stock closed at $12.07 on Tuesday, less than half the value in June, when Yahoo spurned a takeover bid by Microsoft. (MSFT) In after-hours trading, shares rose 8% to $13.
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The Silicon Valley company announced the latest round of cuts against a backdrop of poor third-quarter results and a grim economic forecast. The company's profit tumbled 64%, to $54 million, or 4 cents per share, from $151 million, or 11 cents per share, in the same quarter a year ago.
Revenue inched up 1%, to $1.8 billion, from a year ago.
The profit fell short of the 9 cents per share forecast by analysts polled by Thomson Reuters.
Reflecting the downturn, Yahoo lowered its revenue estimates for the remainder of the year. It now expects 2008 revenue of $7.2 billion to $7.4 billion — down from a previous estimated range of $7.4 billion to $7.9 billion.
Yahoo said its quarterly profit fell sharply because advertisers slashed spending on online brand promotions. It said it was prepared to further cut expenses in 2009 if the global economic downturn continues to deepen.
"I believe we are doing the right thing to streamline our organization" to cope with a weakening economy, Yahoo CEO Jerry Yang said in a conference call on Tuesday. "The environment is totally different from what it was four weeks ago."
Yet financial analysts, including Martin Pyykkonen of Wunderlich Securities, say a workforce reduction is not enough.
Yahoo is seeking partnerships to boost its bottom line. Yahoo wants to outsource some search advertising to Google, (GOOG) but the Justice Department is investigating the antitrust ramifications of such a deal because Google and Yahoo control more than 80% of the U.S. search ad market.
Google CEO Eric Schmidt and Yang on Tuesday said their companies continue to talk to the Department of Justice about making the deal happen.
