SAN FRANCISCO (AP) — Yahoo is laying off 2,000 employees
as new CEO Scott Thompson sweeps out jobs that don’t fit into his plans
for turning around the beleaguered Internet company.
The cuts announced Wednesday represent about 14 percent of the 14,100 workers employed by Yahoo.
The
company estimated it will save about $375 million annually after the
layoffs are completed later this year. Yahoo will absorb a pre-tax
charge of $125 million to $145 million to account for severance
payments. The charge will reduce Yahoo’s earnings in the current
quarter.
Workers losing their jobs will be notified Wednesday.
Some of the affected employees will stay on for an unspecified period of
time to finish various projects, according to Yahoo.
The
housecleaning marks Yahoo’s sixth mass layoff in the past four years
under three different CEOs. This one will inflict the deepest cuts yet,
eclipsing a cost-cutting spree that laid off 1,500 workers in late 2008
as Yahoo tried to cope with the Great Recession.
The previous
purges under Yahoo co-founder Jerry Yang and his successor, Carol Bartz,
boosted earnings. But trimming the payroll didn’t reverse a revenue
slump, which has disillusioned investors yearning for growth at a time
when more advertising is flowing to the Internet.
The cuts are
part of an overhaul aimed at focusing on what Thompson believes are
Yahoo’s strengths while also trying to address its weaknesses in the
increasingly important mobile computing market.
Thompson is
betting Yahoo will be able to sell more advertising if it’s more astute
in the analysis of the personal information that it collects from the
roughly 700 million people who visit its website each month. He is also
looking for ways to improve the products that it makes for smartphones
and tablet computers, a goal that may require hiring more specialists in
mobile technology.
Yahoo also has been exploring selling a
service, called Right Media that helps place ads around the Web. If a
deal gets done, that would enable Yahoo to shed even more workers. No
further details on the Right Media discussions were provided on that
effort in Wednesday.
Thompson is making his move three months
after Yahoo lured him away from a job running eBay Inc.’s online payment
service, PayPal.
The layoffs "are an important next step toward a
bold, new Yahoo — smaller, nimbler, more profitable and better equipped
to innovate as fast as our customers and our industry require,"
Thompson said in a statement.
"We are intensifying our efforts on
our core businesses and redeploying resources to our most urgent
priorities," he said. "Our goal is to get back to our core purpose —
putting our users and advertisers first — and we are moving aggressively
to achieve that goal."
Yahoo’s stock rose 9 cents to $15.27 in morning trading Wednesday.
Thompson
said he would elaborate on his plans April 17 when Yahoo, which is
based in Sunnyvale, Calif., is scheduled to release its first-quarter
results.
Wednesday’s upheaval is the latest sign of Thompson’s
determination to shake up the company. Once a pacesetter, Yahoo in
recent years has been outmaneuvered and outsmarted by Internet search
leader Google Inc. and social networking leader Facebook Inc. in the
race for online advertising.
Since Thompson arrived, Yang left
Yahoo, and four other members of the company’s board, including Chairman
Roy Bostock, have decided to step down later this year. The exodus
cleared the way to appoint five new directors to join Thompson on what
will eventually be a 10-member board.
One of Yahoo’s largest
shareholders, hedge fund manager Daniel Loeb, is pledging to shake up
the board yet again. Spurned by Yahoo, Loeb has launched a campaign to
persuade the company to elect him and three other alternative candidates
as directors. If a truce isn’t reached, the dispute will be revolved in
a shareholder vote at Yahoo’s annual meeting.
Thompson also
picked a fight with Facebook in an attempt to bring in more money to
Yahoo. He is suing Facebook for alleged infringement on 10 of Yahoo’s
Internet patents. Facebook denied the claims and retaliated with a
patent-infringement lawsuit of its own this week.
Copyright 2012 The Associated Press.