Yahoo Confirms Layoffs of 15 Percent of Workforce
The search giant will also shut down some of its digital magazines in an effort to simplify its product portfolio.
Yahoo has confirmed that it is planning to cut 15 percent of its staff as it pursues "strategic alternatives" including the spinoff of its core business.
The cuts are part of CEO Marissa Mayer's effort to reduce costs at the beleaguered search giant as it faces mounting pressure from investors.
Yahoo on Tuesday issued a lengthy plan to simplify the company and narrow its focus. Among the cost-cutting efforts is the closure of offices in Dubai, Mexico City, Buenos Aires, Madrid and Milan.
Yahoo will also consolidate its Digital Magazine business by shutting down some of its verticals. The company plans to close "legacy" products such as Games and its smart TV effort.
Reports of layoffs have circled for several weeks as Mayer is said to be evaluating which aspects of the business to invest in, maintain and do away with entirely. She said in October that she was preparing to narrow the focus of the business.
In total, Yahoo plans to have around 9,000 employees and 1,000 contractors by the end of the first quarter, a 42 percent drop in its workforce since 2012.
A smaller Yahoo would make the company more attractive to investors and confirmation of the layoffs come as the company acknowledges that it will explore a sale of its business.
Chairman Maynard Webb said in a statement that the board "believes that exploring additional strategic alternatives, in parallel to the execution of the management plan, is in the best interest of our shareholders. Separating our Alibaba stake from our operating business continues to be a primary focus, and our most direct path to value maximization." He added that Yahoo will continued to work on its reverse spinoff of the core business and "will engage on qualified strategic proposals."
Mayer, who was hired in 2012 to turnaround the once-dominant Yahoo, has lost a number of top executives in recent months and is under fire from activist investors over her plans for the company. Yahoo had been nearing a spinoff of its Alibaba shares before scrapping the plan late last year in favor of exploring new ways to separate its core business from the Alibaba stake.
The cost-cutting measures are expected to reduce Yahoo's operating expenses by more than $400 million by the end of the year.
Yahoo is also planning to organize into three categories — Search, Mail and Tumblr — and four verticals — News, Sports, Finance and Lifestyle. On the search side, the company will focus on mobile.
Yahoo says it will explore the sale of "non-strategic assets" and estimates that a divestiture of those assets could generate between $1 billion and $3 billion in cash.
Mayer has already pulled back on Yahoo's media business, once a core piece of her strategy for the company. Yahoo took a $42 million write-down on TV projects including Community and shut down video portal Yahoo Screen.
Yahoo shares closed Tuesday down less than 2 percent to $29.06. The stock was trading down more than 1 percent after hours.