Yahoo! Inc. (NASDAQ:YHOO) CEO, Marissa Mayer, is shifting her focus to job cuts as he seeks to revitalize the company’s profit margins. The Wall Street Journal reports that the embattled search giant is planning to slash about 15% of its workforce. Having failed to register any form of growth in thirteen quarters, Mayer is shifting her focus from pursuing market share to drastic cuts.
Job Cuts Push
The cuts could be announced as soon as the chief executive takes to the podium to report the company’s earnings. In the first nine months of last year, Mayer slashed as many 1,800 jobs mostly targeting offices outside the US. Even with the round of cuts, the company is still considered massive considering the size of its business.
Job cuts are not the only cuts expected as Mayer looks to shore up Yahoo! Inc. (NASDAQ:YHOO)’s margins. Closure of some businesses could be in the offing as part of the internet company’s cost saving plan.
Yahoo finds itself in a tight spot. Expenses were up for the first nine months of the year to $3.9 billion as revenues tanked by 4% to $3.09 billion. Costly deals that have failed to trigger any form of growth have been attributed to an increase in operational expenses.
Activist Investor Pressure
The proposed cuts come at a time of immense tussle with activist investors over what should be Yahoo’s long term play. Showing desire to shore up earnings through cost cuts could help Mayer avert a potential proxy fight with angry investors.
Activist hedge fund, Starboard Value has been vocal about a change of the company current management team. It has also called for a spinoff of company’s internet business as one of the ways unlocking shareholder value.
Last year October, Mayer confirmed plans to narrow the company’s areas of focus. However, she never provided details of what she intended to do. Things have changed over the past few months with many investors now pushing for a spinoff of some of the company’s key units.
A spinoff of Yahoo! Inc. (NASDAQ:YHOO)’s stakes in Alibaba Group Holding Ltd (NYSE:BABA) continues to evoke mixed reactions from interested parties. Cost cut plans could end up making the Internet giant an attractive buy prospect for other companies.
Anthony Young
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