Yahoo To Cut 15% Of Workforce By The End Of 2016

Yahoo is working on a new strategic plan according to which it will cut 15% of its workforce and additionally close down five units.

Surprisingly, Yahoo! Inc. reported better than expected results for the fourth quarter of fiscal year 2015. During the after hour trading, the stock of the search engine company went down by 1% only. Despite of the fact that it reported better than expected financial results, it provided a poor guidance for the upcoming quarters, which results in the decline of the stock, but the chief executive officer of Yahoo, Marissa Mayer has a revival plan to bring the company back on track.

According to the earnings call, the company reported non-GAAP earnings per share of $0.13. The EPS was completely in line with the estimations of the analysts. However, analysts had predicted the technology giant to report revenue of $1.19 but it managed to beat the consensus of analysts and reported revenue of $1.27 billion for the latest quarter.

The revenue reported by the tech organization reflected a 2% year-over-year growth; additionally the EX-TAC revenue was seen at $1 billion, which indicated a 15% year-over-year decline. The company reported a net loss of $4.35 billion for the year 2015. A number of people stated that this net loss was mainly due to the $4.5 billion goodwill impairment charge. This means that the business paid more for the startup businesses that it acquired during the year. Revenue for 2015 stood at $4.96 billion, which reflected 8% year-over-year growth.

Since the past two years, revenue growth has been flat according to the collected Yahoo statistics. The traffic acquisition cost (TAC) is fairly increasing due to the deals that have been struck with Microsoft Corporation and Mozilla.

According to the guidance provided by the company for the year 2016, the full revenue is likely to be somewhere between $4.4 billion and $4.6 billion. This estimation by the organization is low in comparison to the estimations of analysts, as they are expecting revenue to be $4.78 billion for the year.

Yahoo! Inc. stated that in the first quarter of fiscal year 2016, the technology business is likely to report revenue of somewhere between $1.05 billion and $1.09 billion – which does not live up to the expectations of analysts yet again.

CEO Marissa Mayer said during the earnings call that the New Year will be a transition year for the organization in which the earnings and the revenue is likely to decline but will return to a normal to modest growth in 2017 and 2018. Additionally, she also suggested a new strategic plan that will transform it to bring better days.

As per the strategic plan, the company is expected to close down 5 units and probably cut down 15% of its workforce in the end of 2016 – this indicates that ever since 2012, the total workforce cut will be of 42%. With this cut in the workforce, the business will be able to maintain its focus on its profitable segments.