Yahoo Worth $18, Gets Nimble To Focus On Core Businesses

YHOO: Yahoo! logo

Just as we speculated, Yahoo (NASDAQ:YHOO) has gone ahead with its restructuring plans and confirmed that it has cut 2,000 jobs in various divisions, amounting to around 14% of its total workforce. [1] This is one of Yahoo’s biggest layoffs yet and comes at a time when Yahoo is struggling to keep up with its competitors in markets it once dominated – search and display advertising. Yahoo’s CEO, Scott Thompson, announced that it plans to save around $375 million following these layoffs, and create a smaller, nimbler structure which is more profitable and able to innovate more quickly in order to compete with the likes of Google (NASDAQ:GOOG) and Facebook.

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Yahoo to focus on core businesses

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As part of the restructuring, Yahoo will now focus on some of its core businesses – its media and content properties, and online platforms. Most of the layoffs will be centred around the product, search and ad technology divisions.

Yahoo still has nearly 700 million users on its core online properties, which if monetized properly, can generate a significantly higher amount of revenue. Thanks to its platforms and online properties, Yahoo also has a treasure trove of personal information about its users which it plans to leverage to create more personalized experiences, increase engagement on its website, and ultimately generate more ad revenue.

Yahoo’s CEO said: [2]

Today we are restructuring Yahoo! to give ourselves the opportunity to compete and win in our core business. The changes we’re announcing today will put our customers first, allow us to move fast, and to get stuff done. The outcome of these changes will be a smaller, nimbler, more profitable Yahoo! better equipped to innovate as fast as our customers and our industry require.

We are intensifying our efforts on our core businesses and redeploying resources to our most urgent priorities. Our goal is to get back to our core purpose – putting our users and advertisers first – and we are moving aggressively to achieve that goal.

We currently have a $18 Trefis price estimate for Yahoo, which stands nearly 20% above its market price. Display and search advertising generate most of its revenue.

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  1. Yahoo Cuts 14 Percent Of Workforce; 2,000 Given Pink Slips; Will Save $375M, Techcrunch []
  2. Read Yahoo CEO’s Letter to Employees About Layoffs, WSJ []