As part of plan to boost profits and focus its business, Yahoo announced a streamlining effort that will include the sale of “non-strategic” assets and a workforce reduction of 15%, or about 1,600 jobs.
Yahoo said it’s exploring the divestiture of assets that include non-strategic patents and the sale of some real estate, believing that the efforts will bring in between $1 billion to $3 billion in cash.
The expected workforce reduction is being paired with the shutting down of five offices in Dubai, Mexico City, Buenos Aires, Madrid, and Mila. Most of those changes will occur in Q1 2016, but will be complete by the end of 2016. Yahoo expects to end the year with 9,000 employees and fewer than 1,000 contractors, a move that will save $400 million in annual expenses.
Yahoo also said it is pushing forward with previously announced plan for a reverse spin, with a separation of its Alibaba stake a "primary focus."
Yahoo also outlined other parts of its strategic growth plan, noting it will prioritize its user base of more than 1 billion monthly active users.
On the consumer end, Yahoo’s business will consist of three platforms: Search, Mail and Tumblr; and four verticals: News Sports, Finance and Lifestyle.
For advertisers, it will lean on two “core offerings”: Gemini (search and native ads), and Brightroll, the programmatic ad platform Yahoo acquired in November 2014.
Additionally, Yahoo will refine its focus on mobile search, calling it the company’s’ “biggest opportunity” in that part of its business.
Yahoo will also invest more in its Mavens (mobile, video, native and social) strategy, noting that revenues from that segment reached $1.6 billion in 2015, a 45% increase.
Among its simplification efforts, Yahoo, which recently shut down the Yahoo Screen streaming service, will “consolidate some Digital Magazines under one of our four core verticals, while others will be shut down. It will also exit some legacy product areas including games and smart TV.
"Today, we're announcing a strategic plan that we strongly believe will enable us to accelerate Yahoo's transformation," Marissa Mayer, CEO of Yahoo, said in a statement. "This is a strong plan calling for bold shifts in products and in resources. We are extremely proud of the billion dollar plus business we have built in mobile, video, native, and social. Our strategic bets in Mavens have enabled us build an entirely new, forward-leaning business of tremendous scale and growth in just three years. The plan announced today builds from that achievement and will dramatically brighten our future and improve our competitiveness, and attractiveness to users, advertisers, and partners."
"The Board is committed to the turnaround efforts of the management team and supportive of the plan announced today. We have tremendous respect for the thousands of Yahoos who work very hard to make the world a better place," added Maynard Webb, Yahoo's chairman of the board. "The Board also believes that exploring additional strategic alternatives, in parallel to the execution of the management plan, is in the best interest of our shareholders. Separating our Alibaba stake from our operating business continues to be a primary focus, and our most direct path to value maximization. In addition to continuing work on the reverse spin, which we've discussed previously, we will engage on qualified strategic proposals."
Yahoo announced the plan as it issued Q4 2015 results. It posted Q4 revenues of $1.27 billion, up from $1.25 billion in the year-ago quarter, and earnings of 13 cents per share. Analysts were expecting 13 cents on $1.19 billion in revenues.
Yahoo shares were down 41 cents (1.41%) to $28.65 each in after-hours trading Tuesday.