Yahoo confirms restructuring plans after Q4 loss

News Broadband Global 3 FEB 2016
Yahoo confirms restructuring plans after Q4 loss

Yahoo! announced plans to narrow its focus, lower costs and work to improve its revenues and profitability, after reporting a net loss for the last quarter of 2015. In 2016, the company will prioritize growing engagement with its user base and simplify its product portfolio to emphasize those products that distinguish the company competitively and drive the most substantial portion of users and revenue. 

For consumer products, Yahoo will consist of three global platforms: Search, Mail, and Tumblr, and four verticals: news, sports, finance and lifestyle in growth markets like the US, Canada, UK, Germany, Hong Kong and Taiwan. For advertisers, Yahoo will be defined by two core offerings: Gemini and BrightRoll. Gemini combines search and native ads for superior results, while BrightRoll offers programmatic buying and selling tools for video, display and native advertising.

Yahoo will continue to invest in its Mavens strategy (mobile, video, native and social) to grow sales from these areas to USD 1.8 billion this year from USD 1.6 billion in 2016. On the cost side, the company targets reductions in operating expenses of over USD 400 million by the end of 2016. This will include cutting its workforce by roughly 15 percent and closing offices in Dubai, Mexico City, Buenos Aires, Madrid and Milan. The impact on revenue from the product simiplification and office closures is expected to be limited to USD 100 million, while the cost cuts are expected to push EBITDA to an annual run rate of USD 1 billion by the second half of 2016, compared to USD 952 million in 2015. 

In addition, Yahoo! will look at selling non-strategic assets, which could generate over USD 1 billion in cash, the company said. At the end of 2015, the company had cash of USD 6.8 billion, down from USD 10.2 billion a a year earlier. Yahoo chairman Maynard Webb said "exploring additional strategic alternatives" would continue alongside the management plan. Separating the company's stake in Alibaba from the rest of the business remains a priority in order to to maximize the group's value. In addition to continuing to work on the proposed reverse spin for the stake, the company will consider other "qualified strategic proposals", he said.

Yahoo revenues and operating result Q4 2013 - Q4 2015

The restructuring plans were announced alongside fourth-quarter results a net loss of USD 4.435 billion. This was due to impairment charges of USD 4.461 billion to write down the value of Tumblr as well as operations in the US and Canada, Europe and Latin America. Excluding the charges, net earnings fell to USD 0.13 per share from USD 0.30 a year ago. Revenue rose slightly to USD 1.273 billion from USD 1.253 billion, while adjusted EBITDA dropped to USD 215 million from USD 409 million. 

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Internet

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Yahoo!

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Global

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Staff, Messaging, Financial figures, Portals / social media, Advertising services, Corporate strategy

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