Company to lay off about 1,000 employees
Declining profit, disappointing guidance and layoffs made a dismal day for Yahoo on Tuesday. Combo of negative news sent its stock down 11% in after-hours trading.
Online media powerhouse has lost appeal among Web surfers, potential employees, and advertisers to fast growing competitors like Google and Facebook in the past few years. CEO Terry Semel ankled last year under pressure from investors and the Netco’s new leadership on Tuesday indicated it doesn’t see recovery coming for at least another year.
“While we will continue to face headwinds this year, we believe that the moves we are making will help us exit 2008 stronger and more competitive and return to higher levels of operating cash flow growth in 2009,” CEO and co-founder Jerry Yang said.
Net income plunged 23% during the fourth quarter of 2007 to $206 million. Revenue rose 8% to $1.8 billion, an impressive rate for most companies, but weak compared with other online competitors and Yahoo’s own history.
For the full year, Yahoo’s net income fell 12% to $660 million. It’s the first time the Netco’s profit has declined since the implosion of the dot-com market in 2001. Yahoo’s problems are more unique now, though, as many online firms are booming. However, other traditional portals like AOL and MSN are also losing ground in the new environment.
In a conference call, execs confirmed rumors that Yahoo will be laying off people, targeting approximately 1,000 of its 14,000-plus employees. It’s not clear how many will come from the Santa Monica office, which has been struggling to define its role since media topper Lloyd Braun ankled in late 2006 and many of his senior execs followed.
For 2008, Yahoo is projecting modest revenue growth of between 3% and 15%, reaching a total of $7.2 billion to $8 billion. Company said operating income before certain expenses will stay roughly even or even fall at less than $2 billion.
Yahoo stock was flat at $20.81 Tuesday before earnings were announced. In the past year, its shares have declined 25% amid numerous restructurings.
On Tuesday Yahoo also announced an expanded partnership with AT&T to provide search and display ads on the telecom’s Websites and mobile phones and split revenue. Companies already offer a co-branded broadband service.
(The Associated Press contributed to this report.)