Yahoo
The reductions, affecting about 700 workers, are the first by Chief Executive Officer Carol Bartz, who said yesterday that Yahoo may also eliminate more products. The companys profit and sales met analysts estimates for the first quarter.
“For good or for bad, thats the mantra across the entire Internet universe right now — from a management perspective you are controlling what you can,” said Christa Quarles, an analyst with Thomas Weisel Partners LLC in San Francisco. “The job cuts highlight the fact that the outlook continues to be cloudy, uncertain and with little visibility.”
Bartz, the former CEO of Autodesk Inc., is reorganizing Yahoo to cope with the recession and counter Google Inc.s moves into areas such as display advertising, where Yahoo leads. Online-advertising sales for Yahoos sites fell 10 percent last quarter, including a 3 percent decline in sales from Web-search results and 13 percent in the display business.
Yahoo, based in Sunnyvale, California, rose as much as 89 cents to $15.27 yesterday in extended trading after closing at $14.38 on the Nasdaq Stock Market. The shares had gained 18 percent this year before today.
Profit fell 78 percent to $118.7 million, or 8 cents a share, Yahoo said yesterday in a statement. Excluding fees passed on to partner sites, sales were $1.16 billion. Analysts had estimated profit of 8 cents and revenue of $1.2 billion, according to a Bloomberg survey.
Sales Forecast
Last year, profit was $536.8 million, or 37 cents a share. Those results were bolstered by a $401 million gain from Yahoos stake in Chinas Alibaba.com Ltd.
For the second quarter, Yahoo forecast overall sales of $1.43 billion to $1.63 billion. That compares with $1.64 billion estimated by Quarles.
Bartz, noting the challenges of the global recession, said job cuts could be made up for by hiring in other areas of the company. The company eliminated 1,600 workers at the end of 2008, before Bartz arrived.
“This is not the kind of across-the-board cost reductions that Yahoo undertook” in the fourth quarter, Bartz said. “This is a natural outgrowth of the work were doing to streamline our structure.”
The job reductions will affect workers worldwide and employees will be notified in the next two weeks, Yahoo said. The company, which had about 13,500 employees at the end of the first quarter, said it continues to cut other costs.
“I like the signs that are emanating from this new management,” Larry Haverty, a portfolio manager with Gamco Investors Inc. in Rye, New York, said in a Bloomberg Television interview. “They are continuing to attack at the cost level.”
U.S. online-ad spending growth will slow to 4.5 percent this year, down from 10 percent last year, according to New York-based research firm EMarketer Inc. Last week, Google reported its first sequential drop in quarterly sales since it went public in 2004.
Bartz, 60, has assumed the title of president, Yahoo said yesterday. The company also announced that Jeff Russakow, a former Symantec Corp. executive, will join Yahoo as senior vice president of customer advocacy, reporting to Bartz.
Bartz arrived at Yahoo after former CEO and co-founder Jerry Yang spurned a buyout offer from Microsoft of as much as $47.5 billion. The two companies are now in negotiations for a Web-search partnership, according to people familiar with the matter. The outcome of the negotiations is probably several weeks away, one person said yesterday.
Bartz said during the call that the search business is valuable to Yahoo, declining to comment further on Microsoft.