YAHOO! - 2,000 People Don't Have a Job
It was revealed on Wednesday that Yahoo (NASDAQ: YHOO) will be laying off 2,000 employees, roughly 14% of the company's workforce, as CEO Scott Thompson sets about streamlining the underperforming company.
According to CNN, the jobs cuts have been rumored for some time, and these 2,000 people could be only the first of many looking for a new source of income in an horrendously tough economic climate, if Thompson has his way.
The new CEO is looking to pare YHOO down to focus on what he sees as the company's core business lines. In a written statement today, he was unapologetic.
"Today's actions are an important next step toward a bold, new Yahoo -- smaller, nimbler, more profitable and better equipped to innovate. Our goal is to get back to our core purpose -- putting our users and advertisers first."
Of course, nobody is suggesting that Thompson wants to gloat in the faces of families who are now facing a torrid time during a period of record foreclosures. However, a less celebratory tone to the statement might have been appropriate.
The company believes that the job cuts will save Yahoo $375 million per year when completed. There will be a $125 million to $145 million charge this quarter as it dishes out severance pay.
In a research report published on Tuesday, Piper Jaffray said that its March checks suggest February's momentum was not built upon, as it believes 52% of home page ads that it observed in the month were guaranteed compared to 55% in February and 61% last March. Piper believes its checks suggest that Yahoo!'s display segment is likely to be in line with our down 4% y/y expectation for Q1.
"We expect Yahoo! overall to report an in-line quarter (Street at $0.17 on $1.06b). While deal talks around Asian assets seem to have slowed, we believe a Alibaba/Yahoo! Japan deal could still happen and would drive upside through excess cash that Yahoo! could use to buy back shares."
Piper also said that, in addition to tracking the number of guaranteed ads on Yahoo!'s home page, it also noted the number of rich page takeover units (either expandable ads or ads with elements that extend byond the typical banner unit) and log-in page sponsorships. While rich ads were up significantly in February, they pulled back to historical levels in March.
© 2014 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.