Yahoo Q4 lacking; layoffs confirmed
Shares hit 52-week low; 1,000 pink slips on the wayYahoo shares sank to a 52-week low after Wall Street's closing bell Tuesday as investors viewed the company's quarterly financial results as lacking and executives confirmed that about 1,000 employees will get the ax next month.
CEO Jerry Yang said the layoffs, along with "hundreds of millions of dollars" worth of investments that he did not detail, are part of a "multiyear transformation" at Yahoo.
The "work force realignment" consists of "targeted" job cuts, he told analysts during a conference call. Yahoo has about 14,300 employees.
Executives said Yahoo's efforts to de-emphasize or shutter noncore businesses, an initiative undertaken when Yang replaced former CEO Terry Semel last year, have begun to achieve the desired effects.
"We are seeing early signs of success as a result of this clear new focus, with core business areas growing faster in the second half of 2007 than the first half," Yang said.
Yahoo also said Tuesday that it has renewed a high-profile partnership with AT&T for broadband Internet access, though the multiyear deal this time includes mobile phones and sharing advertising revenue.
The company also got itself a new chief technology officer, Aristotle Balogh, formerly CTO of VeriSign. Yahoo's former CTO resigned in June.
Yahoo reported fourth-quarter profit of $205.7 million, down from $268.7 million in the same period a year ago. On a per-share basis, Yahoo earned 15 cents, better than the 11 cents analysts expected.
Revenue was a tad lower than expected, however, at $1.4 billion, up 14%, excluding traffic acquisition costs, the usual metric used by analysts.
Investors who were selling the stock in droves in after-hours trading seemed keyed on Yahoo's tepid revenue guidance of $1.28 billion-$1.38 billion in the current quarter. Some observers were arguing that the price drop in the stock was an over-reaction given that there were few analysts who were not predicting weak guidance.
Yahoo shares, which gained fractionally during regular trading, tumbled 10.6% to $18.60 in the after-hours session. The stock had traded in a range of $18.72-$34.08 during the past 52 weeks.
While Yang made a vague reference to "headwinds" the company faces this year, he refused to take the bait when analysts asked his opinion of broader economic conditions. "We're not in the business of prognosticating the economy," he said.