Yahoo to lay off 2,000 workers to 'reshape' company future
As expected, Yahoo today announced that it will lay off a large number of its employees.
The company said this morning that it will begin notifying about 2,000 employees of their "job elimination or phased transition." Yahoo currently employs about 14,000 people around the world, so the layoffs will affect about 14 percent of its workforce.
In its statement, Yahoo said that it can realize approximately $375 million in annualized savings through the terminations. However, it also plans to take an estimated $125 million to $145 million pretax cash charge related to severance.
"Today's actions 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," CEO Scott Thompson said today in a statement. "We are intensifying our efforts on our core businesses and redeploying resources to our most urgent priorities. 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."
"Unfortunately, reaching that goal requires the tough decision to eliminate positions," Thompson continued. "We deeply value our people and all they've contributed to Yahoo."
Yahoo was surprisingly coy about its plans. The company said that it has identified areas where it believes it can grow its business and increase return on investment for advertisers. However, it didn't say how it plans to achieve that goal nor when investors -- we'll see what they make of the layoffs -- should expect to see some improvement.
Still, it's clear some things need to change at Yahoo. The company has become bloated, having moved to compete in far too many markets and allowing some of its core services to fall by the wayside. And after firing CEO Carol Bartz last year, the company languished for months as it fielded potential buyout offers from investors and looked for a new chief executive.
Against that backdrop, Yahoo's investors started to revolt. Dissident investor Daniel Loeb has been the most outspoken critic of Yahoo's decision-making and board, and in February filed papers with the Securities and Exchange Commission (SEC) and launched a proxy fight against the online giant. In doing so, he nominated four candidates to Yahoo's board, including former NBC Universal CEO Jeff Zucker and former MTV Networks president Michael J. Wolf.
Yahoo hasn't taken those shots lying down. Last month, the company appointed three new directors to its board.
"The board remains open to hearing Third Point's ideas and to working constructively with Third Point, but believes that appointing Mr. Loeb to the board is not in the best interest of the company and its shareholders," Yahoo said in a statement at the time.
For now, Yahoo shareholders seemed relatively pleased by the company's decision. As of this writing, Yahoo shares are up 7 cents to $15.25.
Looking ahead, Yahoo plans to share more details on which divisions will be most affected by the layoffs and what its plans are at its first-quarter financials call on April 17.
This story has been updated throughout the morning.