As the Sunnyvale, California-based search engine giant Yahoo released its earnings for 2015 Q4 on Tuesday, it became clear that the company is planning to cut workforce and shut down several units. While the company increased its revenues from mobile advertisements, its share value dropped by about 3 percent yesterday morning.
According to USA Today, the struggling Internet icon said that it is trying to cut costs by $400 million, in order to "simplify" operations and this would result in 15 percent layoffs. In other words, the company would be cutting as many as 1,500 jobs and closing its offices in Buenos Aries, Milan, Madrid, Mexico City and Dubai by March 2016 end.
At the same time, the Internet giant disclosed its plans to discontinue with some products, like a number of its digital magazines that were launched recently and Yahoo Games as well as Yahoo Smart TV. While Yahoo continues to wobble in its efforts to continue with other products like Flickr, the company said that it would look at specific strategies, for instance selling real estate.
Yahoo CEO Marissa Mayer said that the company is currently concentrating on a reverse "spin-off" of the Internet giant's stakes in Alibaba and Yahoo Japan, which amounts to several billion dollars, in order to give back its investors that value. In fact, several investors as well as analysts have been urging Yahoo to take this move so that the company can sell some of its core business.
Interestingly enough, IB Times reported that Yahoo earned revenues worth $1.27 billion for 2015 Q4, beating the expectations of analysts who had predicted revenues worth $1.19 billion during the quarter. However, these revenues did not take in a non-cash goodwill impairment charge worth $4.5 billion, as the carrying value of the shares across the globe, including Tumblr, surpassed their respective expected fair values.
According to Sarhan Capital CEO Adam Sarhan, this is not a healthy sign. When a company has a goodwill impairment charge, it depicts weakness and not strength.
Accepting the demands of the investors and analysts, Yahoo will now concentrate on its search, mail plus Tumblr products in markets like the United States, Canada, U.K., Hong Kong, Denmark and Taiwan. In addition, Mayer said that Yahoo plans to emphasize on growing the company's verticals in news, finance, sports and lifestyle.
Watch Yahoo's 2015 Q4 earnings below: