Advertisement
U.S. markets open in 6 hours 24 minutes
  • S&P Futures

    5,208.00
    -6.75 (-0.13%)
     
  • Dow Futures

    39,217.00
    -6.00 (-0.02%)
     
  • Nasdaq Futures

    18,181.75
    -49.75 (-0.27%)
     
  • Russell 2000 Futures

    2,047.10
    -2.70 (-0.13%)
     
  • Crude Oil

    82.53
    -0.19 (-0.23%)
     
  • Gold

    2,160.20
    -4.10 (-0.19%)
     
  • Silver

    25.12
    -0.14 (-0.55%)
     
  • EUR/USD

    1.0868
    -0.0008 (-0.08%)
     
  • 10-Yr Bond

    4.3400
    0.0000 (0.00%)
     
  • Vix

    14.33
    -0.08 (-0.56%)
     
  • GBP/USD

    1.2706
    -0.0022 (-0.17%)
     
  • USD/JPY

    150.3150
    +1.2170 (+0.82%)
     
  • Bitcoin USD

    64,320.82
    -4,047.23 (-5.92%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • FTSE 100

    7,722.55
    -4.87 (-0.06%)
     
  • Nikkei 225

    40,003.60
    +263.20 (+0.66%)
     

Yahoo Cuts Workforce 1% to Lower Costs, Boost Growth - Analyst Blog

Reportedly, web pioneer Yahoo! Inc. (YHOO) is reducing its global workforce by about 1% or nearly 125 positions to reduce operational costs. The layoff reflects an attempt to concentrate on growth areas with an optimized cost structure that would, in turn, improve the company’s competitiveness.

The workforce reduction primarily affected Yahoo’s Canada office, which focuses on the news and entertainment division. Additionally, Canadian business newspaper Les Affaires reported that Yahoo has closed its French-language Yahoo Quebec newsroom in Montreal, thereby laying off a few journalists but retaining the sales staff.

This is yet another staff reduction under chief executive officer Marissa Mayer. In Oct 2014, Yahoo had eliminated about 400 jobs in India to optimize its cost structure. Management stated that the company is seeking newer means for greater efficiency, collaboration and innovation across its business.

Mayer, who joined Yahoo in 2012, has been taking initiatives to get this struggling Internet company back on track. In this regard, the company acquired more than two dozen companies. Through the various initiatives, Mayer attempts to save costs and invest in fast growing areas, including new advertising services for mobile.

These efforts are slowly paying off and management is delivering on its promises. In the last reported quarter (fourth-quarter 2014), Yahoo’s adjusted earnings (excluding all one-time items but including SBC) came in at  20 cents per share, above the Zacks Consensus Estimate of 19 cents. Also, revenues of $1.25 billion were up 9.1% sequentially but down 1% year over year.

Yahoo does have a difficult market to navigate through and it hasn’t got any easier. Being the leader in the traditional PC display ad market, the secular decline due to the advent of mobile dealt a severe blow to the company. Additionally, social networking sites like Facebook (FB) and Google Inc. (GOOGL) have been eating into its market share over the years. Also, Yahoo has been facing opposition from activist investor Starboard Value to take significant cost-cutting measures to turn its performance around.

We believe that Yahoo’s restructuring efforts could help Mayer in bringing about a positive change. Also, a leaner cost structure would boost margins and earnings growth in the near term.

Yahoo, currently, has a Zacks Rank #3 (Hold). Another stock that has been performing well is AOL Inc. (AOL), sporting a Zacks Rank #2 (Buy).


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
YAHOO! INC (YHOO): Free Stock Analysis Report
 
AOL INC (AOL): Free Stock Analysis Report
 
FACEBOOK INC-A (FB): Free Stock Analysis Report
 
GOOGLE INC-CL A (GOOGL): Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research

Advertisement