When Marissa Mayer took over the corporate reins of Yahoo! more than three years ago, she put into effect a plan to forge a new business strategy. Unfortunately, the plan has not worked as hoped for and Yahoo! are still under considerable pressure. We have seen investors calling for Marissa to be replaced and the business staff size to be reduced from the current 10,000 to around 3,000. We’ve recently seen a report that the company is planning to cut at least 10% of the workforce, which in numeric terms means over a thousand employees could be losing their jobs. These additional job cuts follow a head cut reduction of 14% over the last twelve months. The new job cut process could be starting from as early as later this month and is believed to involve the media business, European operations and platforms-technology division. In particular, the parts of the company providing the technology that support their services appear to be targeted by the job cuts. An unnamed source close to the company is reported to have said: “A team is working on it and they want to do it this quarter.” Whilst Yahoo has refused to comment on this particular story, the business has already explained to investors that it has plans to change in motion. The company said it has “additional plans for a more focused Yahoo on or before our Q4 earnings call,” and this earnings call is likely to be later in January.
Last November, Yahoo! hired McKinsey & Co to help assist with a business restructuring and advise on the divisions the company should be closing. One of the focus points of Yahoo!’s reorganization is the “digital magazines” units; these media businesses are under pressure to perform. Yahoo! has recently announced it is to close Yahoo Screen and for 2016, the digital magazines business units have not seen their budgets. This means that these divisions are unable to plan for the year and has put coverage of major events, such as the Golden Globes award this weekend, into jeopardy. Yahoo! also closed its production studios for a two week break at the end of the year, which reduced its contractor costs, and plans to expand the business premises onto land near its Silicon Valley headquarters appear to have been put on ice.
Today’s news comes at a time when Yahoo! have traditionally been planning and awarding annual bonuses for staff. Unfortunately, with the business struggling to perform and in an effort to appease investors, we may see Yahoo! close those underperforming divisions and consolidate staff numbers. However, the company is keeping quiet and we will need to wait for official confirmation.