Yahoo to slash jobs, costs as quarterly profit falls
Yahoo said today that it would lay off at least 10% of its workforce over the next few months to grapple with the fallout of the deepening economic crisis. A slumping online advertising market hammered Yahoo's third-quarter profit, and the Internet company lowered its revenue forecast for the rest of the year.
At least 1,500 employees will lose their jobs as part of Yahoo's cost-savings plan, which the Internet company hopes will reduce costs by $400 million a year. Yahoo is based in Sunnyvale, Calif., and also has offices in such cities as Santa Monica, San Francisco and New York. It didn't say where the cuts would occur.
Yahoo shares lost 6.1%, or 79 cents, to $12.07 in regular trading then gained more than 5% in after-hours trading after the report.
The company said it would also achieve "substantial additional cost savings" by addressing "structural inefficiencies." Earlier this year, Yahoo hired consultants Bain & Co. to help identify such cutbacks.
In a statement, Yahoo Chief Executive Jerry Yang said that economic conditions and online advertising had softened during the third quarter. Yahoo now projects that 2008 revenue will be between $7.18 billion and $7.38 billion, down from a forecast, issued three months ago, of $7.35 billion to $7.85 billion. Yang said the company would continue to balance investing in new products with keeping a tight grip on costs.
"Despite a tough environment, we remain optimistic about Yahoo's future," he said during a conference call with analysts.
But the third-quarter numbers tell a grim story. Yahoo earned $54.3 million, or 4 cents a share, a 64% decline from $151.3 million, or 11 cents a share, a year ago.
-- Jessica Guynn
Photo: Yahoo CEO Jerry Yang. Credit: Paul J. Richards AFP / Getty Images
$7.18 BILLION REVENUE for 2008? Is that it? Wow... it must be hard dealing with that. I'm REALLY sorry to hear how bad that is.
Posted by: Jared | October 21, 2008 at 03:20 PM
Who the hell has been asleep and didn't see this coming like an out of control frieght train. Does this scare you? Stand by, ;cause you ain't seen nothing yet.
Posted by: englishsunset | October 21, 2008 at 03:32 PM
Down to $12 as of today. Wasn't Uncle Bill offering $33 last May?
This would be the "second round" of layoffs as they say....
Why is Jerry Yang still employed at Yahoo? Shouldn't he be first on the list?
Posted by: Big Jim Slade | October 21, 2008 at 03:41 PM
yang is to yahoo, as bush is to good government and world peace.
Posted by: PNW Trojan | October 21, 2008 at 04:17 PM
Good to see they are optimistic, I wish the optimism turns into the right measures to cut costs that will actually help the company survive the recession.
Posted by: Svetlana Gladkova | October 22, 2008 at 01:41 AM