Yahoo! profits plummeted 64 per cent in its latest fiscal quarter - yes, 64 per cent - and the company says it will jettison at least 10 per cent of its workforce by the end of the year.
"As we saw the online ad market decline in the third quarter, I decided that Yahoo! needed to accelerate the process of becoming more efficient and competitive," said CEO Jerry Yang, the man who refused a $47.5bn takeover bid from Steve Ballmer. "I believe getting Yahoo! more fit at this time will provide the flexibility for navigating current conditions and strengthen our position for the future."
Yang's goal is to slice $400m from the annual cost of running his beleaguered outfit. "Because a majority of our costs are headcount related, we anticipate that we will reduce our global workforce by at least 10 per cent by year end. This is the first step in a longer term effort that will last into '09 and beyond."
The company will also transform itself in other ways. This may include "relocating some operations to lower cost geographies, consolidating real estate, improving procurement, and standardizing our global technology platform."
During the quarter ending September 30, Yahoo! pulled in revenues of $1.786m, a 1 per cent increase from the same quarter last year. Meanwhile, profits topped out at $54.3m, a 64 per cent drop from Q3 2007, when income surpassed $151m. In other words, Yahoo!'s income was a mere 4 cents per share in Q3 2008 - 5 cents lower than what the Wall Street prognosticators prognosticated.
As a result, the company will lay off at least 1,430 of its 14,300 employees. This marks the second round of Yahooligan deaths in less than a year. This past January, in announcing lackluster profits for Q4 2007, Yahoo! cut loose about 1,000 workers.
In early May, Steve Ballmer offered Jerry Yang $33 a share for his company, and Yang declined, insisting the offer didn't match Yahoo!'s true value. Less than six months later, Yahoo! is trading at $12.07 a share. Following today's earning call, the company's share price dropped more than 6 per cent in after hours trading.
During the call, Yang bragged that "consumers continue to make Yahoo! their destination of choice around milestone global events, such as The Olympics, the [US presidential] election, and the current financial crisis." But speaking form the other side of his mouth, he blamed The Meltdown for Yahoo!'s revenue slowdown.
He's sure, however, that Yahoo! is better off than every other internet ad broker - at least where display ads are concerned. "Despite a tough environment, I remain very optimistic about Yahoo!'s future. While many advertisers are guarding budgets carefully, I am encouraged that most display advertisers that are still spending in this environment are spending with Yahoo!"
Meanwhile, Google's profits leapt 31 per cent during Q3, thanks to its monopoly in the search advertising biz. ®