Yahoo Threatens More Job Losses

It’s shocking to see a former “major player” like Yahoo fail so drastically and so suddenly …

Just weeks after internet portal announced it would lay off entire divisions, quarter four results show revenue fell 4%

Net revenue at the increasingly troubled internet portal Yahoo slid 4% in the past quarter, and it forecast a another dip this quarter – and more layoffs among its staff – as it struggles to revive growth in the face of intense competition from Google and Facebook.

Although its net income more than doubled, to $312m from $153m, beating analysts’ expectations, the company said last night that it will have to lay off a further 1% of its 14,100 staff, just weeks after announcing 4% cuts in which entire divisions were laid off or given a “sunset” label. Chief executive Carol Bartz said the company would add staff through the year but keep costs static.

In response, the company’s shares fell 4.4% at $15.39 in after-hours trading. The figures were a stark contrast to those of Google last week, which announced that in the same quarter its revenue had grown 26% to $8.4bn, and its profits by 29% to $2.5bn. The dominant search engine company also announced that it is to hire a thousand people in Europe.

eMarketer, which analyses US online ad spending, reckoned that Yahoo’s display advertising share fell last year to16.2% of display revenues, down from 16.5% in 2009, while in the same period Facebook accounted for 13.6% of display revenues, up from 7.3% in 2009.

Yahoo’s chief financial officer Tim Morse insisted that “we are a premier digital media company increasingly focussed on our mission” of providing compelling content.

But Bartz said that while it was not getting the click revenue it had hoped for, it was working well with Microsoft and remained confident in the value of the alliance. “We picked the right partner,” Bartz insisted.

Yahoo gets 638 million visitors every month, Bartz said, though its pageviews fell by 1% year-on-year. Bartz pointed to its 40% stake in AliBaba, the biggest search engine in China, as showing promise: “With e-commerce exploding in the largest country in the world, we feel our investment in Alibaba will grow in value and continue to greatly benefit our investors over time,” she said.

Yahoo’s net revenue excludes money from partner sites, principally Microsoft, which now provides its underlying search and took a 12% share on revenue in the fourth quarter. Yahoo’s gross revenue, of $1.525bn, shows an even worse pattern, with a 12% slide compared with a year ago. But Yahoo said that some of this was down to accounting changes to allow for search results provided on partner sites, and that revenue would have been flat in a year-on-year comparison without it.

The company has struggled to find revenue growth, with gross revenues failing to grow since the third quarter of 2008 when an attempted takeover by Microsoft fell apart. Bartz joined at the start of 2009.

However in an analyst call following the results release, Bartz called the results “a very encouraging quarter”, noting the doubling of profits and earnings per share and operating margin. She said this was done “while investing in our major products to turn Yahoo around”. Yahoo aims to grow revenue by offering attractive products for users, Bartz said.

The company forecast that net revenue in the coming quarter will range from $1.02bn to $1.08bn, compared with the $1.13bn expected by analysts. © Guardian News & Media Limited 2011 | Use of this content is subject to our Terms & Conditions | More Feeds

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