Move comes after first-quarter profit falls 78%
SUNNYVALE, Calif. — Yahoo Inc. will lay off more than 600 workers after getting off to another bumpy start under a tough-talking new boss who has promised to engineer a long-awaited turnaround at one of the Internet’s best-known franchises.
Neither the lackluster first-quarter results nor the job cuts announced today came as a surprise.
Analysts had already predicted Yahoo’s three-year slump would worsen during the first three months of the year, and hints about the payroll purge were leaked to the media last week.
This marks Yahoo’s third round of mass layoffs in a little over a year, but the first batch since the Sunnyvale-based company hired technology veteran Carol Bartz as its chief executive in January.
Yahoo dumped about 1,000 jobs in February 2008 and another 1,500 or so late last year while co-founder Jerry Yang was still running the company. Yang stepped down, largely because he wasn’t able to snap the company out of its financial funk during his 18-month tenure as CEO.
The misery worsened in the first quarter as skittish advertisers spent less on their Internet marketing campaigns.
Yahoo earned $118 million, or 8 cents per share, during the first three months of the year. That represents a 78 percent drop from net income of $537 million, or 37 cents per share, in the year-ago period.
Last year’s results included a non-cash gain of $401 million. But Yahoo’s profit this year still would have been lower even after subtracting last year’s one-time boost.
The latest earnings matched the modest expectations among analysts surveyed by Thomson Reuters.
Revenue fell 13 percent to $1.58 billion. If not for the stronger dollar, Yahoo said its revenue would have been down by 8 percent.
After subtracting commissions paid to its ad partners, Yahoo’s revenue stood at $1.16 billion — about $50 million below analyst estimates.
Yahoo shares gained 15 cents in Tuesday’s extended trading after rising 72 cents, or more than 5 percent, to finish the regular session at $14.38. Investors have been hoping Yahoo will be able to make more money by forging an online advertising partnership with Microsoft Corp. Executives from both Yahoo and Microsoft reportedly have been stepping up their negotiations as the two companies try to counter Internet search leader Google Inc.’s domination of online advertising.