Yahoo Inc said it would cut 5 percent of its global workforce and reported quarterly results that showed progress toward controlling costs, sending shares higher in an after-hours relief rally.
The Internet company said economic conditions remained challenging, as revenue on Yahoo Web sites from both display ads and search ads fell during the first quarter.
But the decline in revenue was offset by better cost controls, as chief executive Carol Bartz seeks to revive Yahoo’s fortunes.
“People were really looking at the profit structure of the business and for things not to be falling apart,” said Kaufman Brothers analyst Jason Avilio.
Yahoo said in October it would cut about one-tenth of its workforce, or about 1,600 jobs. The company finished last year with about 13,600 employees and said it would take severance charges from the new round of layoffs during the second quarter.
The company also announced in an internal memo to employees on Tuesday that it would implement a mandatory shutdown of operations during the holiday week of Dec. 25, through Jan. 1.
Yahoo said its operating cash flow, excluding certain items, was US$409 million in the first quarter, at the high end of the US$365 million to US$415 million range it forecast in January.
Bartz, who replaced Yahoo co-founder Jerry Yang (楊致遠) in the top job in January, reiterated her belief that search is a very valuable part of Yahoo’s business.
“I’m well-versed enough in the search business at Yahoo to say it’s absolutely critical to Yahoo,” Bartz said in response to a question regarding whether she is now familiar enough with the business to respond to an offer for search.
In the first full quarter under Bartz’s leadership, Yahoo generated revenue of US$1.58 billion, down 13 percent from the year-ago period.
Excluding traffic acquisition costs (TAC), Yahoo’s revenue was US$1.16 billion, compared with the average analyst expectation of US$1.2 billion, Reuters Estimates data showed.
The Sunnyvale, California-based company reported a net profit in the first quarter of US$118 million, or US$0.08 a share — down from US$537 million, or US$0.37 a share, a year earlier. Wall Street analysts, on average, had forecast earnings at US$0.08 a share, according to Reuters Estimates.
The new round of job cuts come about two months after Bartz announced a reorganization of Yahoo’s internal management structure.
The layoffs, said Bartz, are a “natural outgrowth” of the reorganization, which would allow Yahoo to streamline its operations and eliminate duplication of efforts.
The Internet company said it would also continue to implement unspecified “non-headcount cost reductions,” so it can increase its ability to make strategic investments and target hiring in its core operations
Yahoo projected that sales in the current quarter would range between US$1.425 billion and US$1.625 billion.