MIAMI, 21 APRIL 2009 - Yahoo's profit and revenue fell sharply in the first quarter, ended March 31, 2009, as the beleaguered Internet company added a softening online ad market to its list of woes.
As part of its ongoing cost-cutting efforts, the company will also lay off employees for the first time under its new CEO, Carol Bartz.
Yahoo had revenue of US$1.58 billion, down 13 per cent from the first quarter of 2008 but higher than the $1.20 billion consensus expectation from analysts polled by Thomson Reuters.
Meanwhile, net income fell 78 percent to $118 million, or $0.08 per share, compared to $537 million, or $0.37 per share, in the first quarter of 2008, which included a one-time, noncash gain of $401 million, or $0.29 per share, related to Alibaba Group's initial public offering of Alibaba.com, the company said Tuesday.
On a pro forma basis, which excludes certain one-time items, Yahoo had net income of $206 million, or $0.15 per share, down 16 percent and 17 percent, respectively, compared to the first quarter of 2008 but exceeding by seven cents per share analysts' expectation.
As had been rumored, Yahoo also announced it will lay off employees, its third major job-cutting round since early 2008. This time around, Yahoo will let go 5 percent of its staff worldwide. Yahoo ended 2008 with 13,600 employees, so this would mean that about 680 people will be laid off. Yahoo handed out pink slips to about 2,600 employees in two rounds of layoffs last year.
In a conference call to discuss the results, Bartz said this new round of layoffs is different in nature from the "across-the-board" staff reduction Yahoo implemented in the fourth quarter, when about 1,600 employees were let go.
"It's a natural outgrowth of the work we're doing to streamline our structure, globalize products, slim down our portfolio and eliminate duplication of efforts," Bartz said.
Yahoo intends to reinvest the money saved in what it considers its key areas for growing user engagement and advertising revenue, she said.
Bartz reiterated throughout the call that Yahoo's key online services must be improved in order to dazzle end-users, which in turn will attract advertisers.
"The best candidates for focused investment and renewed innovation are those that generate the majority of our traffic and corresponding economic value: the home page, sports, news, finance, entertainment, mail, search and mobile," she said. "Getting these products right is imperative to continue to grow our massive user base and increase user engagement."
The company said that it struggled both in display and search advertising, but Bartz, who took over as CEO in January, believes that Yahoo will see its fortunes rise when the economy recovers.
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