Yahoo is on sale. No, it has not put up a signboard stating that in clear words but have send out clear signals that the once highly-valued (and still somewhat popular) company is looking for “strategic alternatives” to keep breathing.
The company led by Marissa Mayer announced on Tuesday that Yahoo will be cutting the workforce by about 15 per cent, which means they will lay off around 1,500 employees and exit five cities where they currently operate out of – Dubai, Mexico City, Buenos Aires, Madrid and Milan.
The Sunnyvale, California based company posted a loss of $4.4 billion in the fourth-quarter.
“Today, we’re announcing a strategic plan that we strongly believe will enable us of accelerating Yahoo’s transformation,” said Yahoo CEO Marissa Mayer in a statement. “This is a strong plan calling for bold shifts in products and in resources.”
Experts say that these and a statement issued by Yahoo chairman Maynard Webb prove that Yahoo is looking for buyers for its core business:
“In addition to continuing work on the reverse spin, which we’ve discussed previously, we will engage on qualified strategic proposals.”
The phrase “strategic proposals” indicate that Yahoo is up for sale. By the end of this year, the company will have approximately 9,000 employees left.
“It represents a workforce 42 per cent smaller than it was in 2012, and save $400 million annually,” the company said.
As part of its new strategy, Yahoo will narrow down its focus on three global platforms — search business, mail and Tumblr blogging site.
Yahoo expects to earn $1-3 billion in cash through the restructuring, which includes selling of patents and real estates.
Yahoo has long been struggling with a host of issues including investor dissatisfaction. Mayer was hired in 2012 to help turn the company around. She failed, leading shareholders to demand that she step down.
As many as seven individuals have held the post of permanent or interim CEOs at Yahoo since 2006.
One reason why Yahoo has failed dramatically is, as Timothy B. Lee writes in Vox, because it could not clearly define whether it is a technology company or a media company.
As of now, Yahoo expects to generate revenue of over $1.8 billion in 2016 through its Mavens strategy – advertisements through mobile, video, native and social platforms.
Today Yahoo’s market value stands at just about $27 billion – less than half what it was in 2005.
“Cutting costs and focusing on its areas of revenue growth should make the operating business more attractive to a potential buyer,” said Paul Sweeney, an analyst at Bloomberg Intelligence.
Formed 20 years ago, Yahoo has clearly failed to compete with newer business such as Facebook and Google.