Yahoo Is Selling Its Core Business
The company lost $4.53 billion this year as its stock has lost 34 percent of its value.
Yahoo announced Tuesday that it would lay off 15 percent of its workforce and “explore non-strategic asset divestitures” in an effort to jumpstart its flatlined earnings.
The announcement came bundled with Yahoo’s fourth-quarter earnings report, where it reported a revenue of $1.27 billion and earnings per share of 13 cents — slightly ahead of estimates but not great as its flagging internet business continues to shrink. Overall, the company lost $4.53 billion this year as its stock has lost 34 percent of its value.
Tuesday’s news was expected, as the board met in December to discuss selling its internet concern and focusing on getting the most out of its lucrative stake in Alibaba, a Chinese company bigger than Amazon or Facebook or IBM. Coincidentally, the e-commerce powerhouse was behind the round of investment that raised Magic Leap a stunning $793 million on the same day as Yahoo’s announcement.
“Today, we’re announcing a strategic plan that we strongly believe will enable us to accelerate Yahoo’s transformation,” said Marissa Mayer, CEO of Yahoo, in the announcement. “This is a strong plan calling for bold shifts in products and in resources. We are extremely proud of the billion dollar-plus business we have built in mobile, video, native, and social. Our strategic bets in Mavens have enabled us to build an entirely new, forward-leaning business of tremendous scale and growth in just three years. The plan announced today builds from that achievement and will dramatically brighten our future and improve our competitiveness, and attractiveness to users, advertisers, and partners.”
The plan estimates that a sale could be worth as much as $1 billion in cash.
Then there’s the reductions. Yahoo also wants to cut its operating expenses by some $400 million by the end of 2016, cut its workforce by 15 percent, and close some international offices. It’ll shut down games, digital magazines, and its smart TV businesses, hoping that when this plan and sale are all wrapped it’ll be back to “modest and accelerating growth in 2017 and 2018.”
And while it seems strange to think of Yahoo as anything but an internet business, the numbers reflect its online revenue is like one cancerous foot on an otherwise healthy body. Of its $27.8 billion estimated value, its internet business is valued by the market at a mere $2 billion.
