Yahoo Slashing 1,000 Jobs Amid Profit Drop
The hammer has fallen. Yahoo will finally make the job cuts Wall Street has craved for a long time, before a backdrop of lower profits caused by higher expenses.
As CEO Jerry Yang and other top Yahoos prepared for today’s earnings conference call, someone updated the company’s home page with a new featured item: ramen noodle recipes. Since ramen has a reputation for being a cheap meal, we wonder if someone was putting out an early warning to fellow Yahoos: stock up now, while you have a job
Yahoo has its financials available for public consumption, but the main idea is this: profits dropped.
With full year 2007 net income pulling in at $660 million, or $0.47 per diluted share, compared to $751 million ($0.52 diluted EPS) for 2006, after-hours selling has knocked the share price down by over ten percent as of press time.
Yahoo could open tomorrow at a new 52-week low, which will stir up the takeover talks and private equity offers again. As has been noted before, making some kind of deal may become a matter of fiduciary duty for Yang and the board for the company’s shareholders.
CFO Blake Jorgenson confirmed the layoffs today. Per Reuters:
“Our outlook contemplates a workforce realignment of approximately 1,000 people that we will be implementing in mid-February,” CFO Blake Jorgensen told investors on a conference call to discuss Yahoo’s recent results and outlook.
Jorgensen said the company expects to record a cash charge of $20 million to $25 million during the first quarter of 2008 that is not included in the company’s stated outlook.
Ari Balogh, CTO at VeriSign, takes the same role for Yahoo and frees up Jerry Yang to concentrate on CEO duties.
Poaching Balogh from VeriSign to handle the CTO role indicates Yang wants to keep focused on improving Yahoo’s performance without the distraction of the added duties. Valleywag suggested Balogh’s appointment may thin out Yahoo’s ranks by at least one person, Ash Patel.
Their well-known brand and presence as the most heavily trafficked Internet site makes Yahoo an impressive Web property. For now it seems Yahoo wants to keep up the appearance of normality in its operations.
For about a thousand people, normalcy will be a fleeting memory soon.