Wall Street has offered a lukewarm reception to plans by Yahoo to lay off 2,000 people, or 14 per cent of its workforce, in order to jumpstart growth and save hundreds of millions of dollars.
Yahoo's shares ended up down 0.6 per cent $15.27 on the Nasdaq yesterday.
Yahoo, which ended 2011 with some 14,000 employees, said it would save $375 million annually from the cuts and incur a pre-tax cash charge in the second quarter of $125 million to $145 million.The company declined to comment on severance details.
Third Point, an activist hedge fund that is waging a proxy fight to install a slate of handpicked directors on Yahoo's board, described the layoffs as "necessary."
But the hedge fund, Yahoo's largest shareholder with a 5.8 per cent stake, said in a statement that it was "disappointed that this round of cuts occurred before chief executive Scott Thompson has articulated his strategic plan for the company."
Mr Thompson, in all-staff memo, said the changes would transform Yahoo into a leaner outfit that focuses on its main businesses, which he identified as "core media and communications," "platforms" and "data."
"The changes we're announcing today will put our customers first, allow us to move fast, and to get stuff done," he said in the memo, adding that the changes would result in a "smaller, nimbler, more profitable" company.
"We are intensifying our efforts on our core businesses and redeploying resources to our most urgent priorities," he wrote.
A Yahoo spokeswoman said that every organization within the company was affected by the layoffs but that some groups were affected more than others. She declined to specify the groups most affected.
Yahoo said it would provide more details of its plans when it releases first-quarter results on April 17th.
The layoffs come as Yahoo's revenue declines due to competition from Google and Facebook. Last year, Yahoo's revenue totalled $4.98 billion, compared with Facebook's $3.71 billion, accomplished with just 3,200 employees.
Yahoo is also fighting a battle with hedge fund manager Daniel Loeb.
Mr Loeb, who runs Third Point, is seeking to appoint four new directors to Yahoo's board.
Reuters
