Yahoo! Inc. (YHOO) is considering making significant cuts to its staff, a person familiar with the matter said, as Chief Executive Officer Scott Thompson overhauls the Web portal’s business to cope with market-share losses.
The firings could begin in a few weeks, said the person, who declined to be identified because the moves haven’t been announced. Thompson, a former EBay Inc. (EBAY) executive, said in January that the Sunnyvale, California-based company would focus on its strengths and “prioritize” how its uses its capital.
Yahoo, owner of the most popular U.S. Internet portal, is looking for ways to increase efficiency following a failed turnaround effort under Carol Bartz, who was fired as CEO in September. Online advertisers have increasingly turned to rivals such as social network Facebook Inc. and search engine Google Inc. (GOOG), websites where users are spending more time each month.
“We need to innovate and disrupt, and not just in the areas where we’ve always been,” Thompson said on a conference call with analysts on Jan. 24. “We will consider new business models and revenue sources and we will build on our core technology and platform expertise.”
The planned firings were reported earlier by the website AllThingsD, which said the cuts “are likely to number in the thousands.” Even though Bartz eliminated jobs while at Yahoo, the company had 14,100 employees at the end of 2011, up from 13,600 at the end of December 2008, less than a month before she became CEO.
“Our leadership is engaged in a process that will generate significant strategic change at Yahoo, but final decisions have not yet been made at this point,” Dana Lengkeek, a Yahoo spokeswoman, said in an e-mailed statement. “Beyond that, we will not comment.”
Yahoo lost its lead in U.S. display advertising in 2011 to Facebook, owner of the world’s largest social-networking service, according to New York-based EMarketer Inc. Yahoo’s share was 11 percent last year, down from 14 percent in 2010, while Facebook’s was 14 percent, up from 12 percent. Yahoo’s share peaked at 18 percent in 2008, EMarketer said.
In January, Yahoo said fourth-quarter revenue, excluding sales passed on to partner sites, fell to $1.17 billion. Income from operations in the first quarter will be in the range of $105 million to $155 million, Yahoo said, shy of the $184.2 million that analysts had projected, according to data compiled by Bloomberg.
Thompson, who started at Yahoo on Jan. 9, was formerly the president of EBay’s PayPal unit. While there, he helped more than double revenue at the payments service while boosting the user base to more than 100 million.
Yahoo shares fell less than 1 percent to $14.62 at the close in New York. The stock has declined 9.4 percent this year.
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