MIAMI, 22 OCTOBER 2008 - Yahoo will lay off at least 10 percent of its global staff before the end of the year, the company announced on Tuesday along with disappointing financial results for its third quarter.
The layoffs are the major portion of a US$400 million cost-cutting plan Yahoo is implementing that also includes other measures for achieving what the company called "structural efficiencies."
Revenue for the third quarter, which ended Sept. 30, increased only 1 percent to $1.768 billion compared with the same quarter in 2007.
Subtracting the commissions Yahoo pays to its advertising partners, revenue was $1.325 billion, up 3 percent.
Net income came in at $54 million, or $0.04 per share, down from net income of $151 million, or $0.11, in 2007's third quarter.
On a pro forma basis, which takes into account one-time items, net income was $123 million, or $0.09 per share, down from net income of $153 million, or $0.11 per share.
Yahoo thus missed Wall Street estimates for revenue and matched their profit expectation. The consensus estimate from analysts polled by Thomson Reuters was for pro-forma earnings per share of $0.09 and revenue -- minus commissions -- of $1.37 billion.
The fourth-quarter staff cuts will be this year's second wave of layoffs for Yahoo, which let go of 1,000 employees in February. Yahoo ended the third quarter with 15,200 employees, which means that at least 1,520 of them will lose their jobs between now and the end of the year.
Yahoo also plans to save money by relocating operations to places where it's cheaper to do business, consolidating its real estate, improving procurement and seeking efficiencies in its technology platform. Cost cutting efforts will continue next year.
In addition, Yahoo cut its full-year revenue expectation sharply from a range of $7.35 billion and $7.85 billion to a range of $7.17 billion to $7.37 billion.
Yahoo Co-Founder and CEO Jerry Yang tried to put a positive spin on the results during a conference call Tuesday, saying that Yahoo is "well positioned for future growth."
He said business results were mixed, with some segments doing well, like U.S. search advertising, while others did not, like U.S. branded display ads and the general performance of the company in Europe and Asia.
Although revenue was disappointing, Yang pointed out that operating cash flow came in "above the midpoint" of Yahoo's outlook range, thanks to cost management measures this year.
While the revenue forecast was cut due to the "uncertain advertising environment" Yahoo faces, the company is reaffirming its operating cash flow outlook for the year.
"Continued substantial cash flow remains one of our core financial strategies and an important goal," Yang said. "We have the balance sheet strength, liquidity and free cash flow we need to continue to make progress in our core strategies as we work our way through this economic downturn."
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