Yahoo latest strategic plan likely just buys time
SAN FRANCISCO — The end of an era?
Perhaps, after Yahoo announced on Tuesday more than 1,600 job cuts — 15% of its workforce — and the closure of operations in five cities amid middling quarterly results.
The company's vow to explore "strategic alternatives" could be tantamount to a billboard-sized sign on the lawn of its Sunnyvale, Calif., headquarters that says, "Yahoo For Sale."
Except management led by CEO Marissa Mayer remains deeply attached to turning around Yahoo. Mayer spent much of the conference call with analysts outlining a "three-legged stool" strategy of focusing on three platforms: search, mail and microblogging property Tumblr. Message: get rid of one, and the rest fall.
"Our vision of Yahoo isn't changing," she said.
Yahoo's latest plan concedes some ground to activist investors, who are pushing for an outright sale of its core assets. Mayer capped her prepared remarks by saying the company's board of directors will engage with qualified strategic proposals.
But these remarks, and talk of continuing with the "reverse spin-off" to separate Alibaba assets, likely don't go far enough.
Yahoo shares (YHOO) lost more ground as she and CFO Ken Goldman explained the new plan. Yahoo shares, off 3% Wednesday at $28.20, are not far from a 52-week low.
Mayer put a brave face on the operational slashing — "This is a strong plan calling for bold shifts in products and in resources," she said — but her best talking points can't mask the fact that things have gone badly.
The company is being squeezed by Google and Facebook for its lifeblood, online advertising. It expects revenue to drop 12% this year.
Charles Schwab just resigned from Yahoo's board, according to an SEC filing released alongside the earnings. Board member Max Levchin departed in December.
Yahoo earnings expected to include layoff details
The significant job cuts, which amount to $400 million a year, don't signal just rough times for Yahoo but a gambit by Mayer to buy time and get the moribund company into shape to make it more attractive to potential buyers.
Mayer needs to appease angry activist shareholders such as Starboard Value and Canyon Capital, which claim she and her management team have made scant progress the past 3½ years to turn around Yahoo.
Yahoo has spent more than $3 billion acquiring the likes of Tumblr, redesigned the company’s logo and signed up media personalities such as Katie Couric — without jumpstarting sales growth. .
Mayer has proved adept at keeping the wolves at bay. In December, she and Yahoo's board staved off a potential flash point when Yahoo agreed with Starboard’s demand to spin off its core Internet business and maintain its 15% stake in Chinese e-commerce giant Alibaba.
There is one more quiver in Mayer’s arsenal: an outright sale. Verizon has said it would consider purchasing Yahoo. But from the sound of Mayer on Tuesday, its sellers aren't yet ready to hand over the keys.
Follow USA TODAY San Francisco Bureau Chief Jon Swartz @jswartz