Sunnyvale, California — After taking stock of its profits that plunged nearly 80 per cent as advertisers cut spending amid the recession, Chief Executive Carol Bartz, on Tuesday assured as she delivered first-quarter financial results that Yahoo! will jettison five per cent of its worldwide workforce. The 5 percent job cuts will be different this time, the company said.
But reviewing her first full three months in charge, Bartz, the group’s new chief executive, asserts that these job cuts are nothing like the job cuts made by the beleaguered web giant at the end of last year, although admitted that it was “not immune to the ongoing economic downturn”.
“To allow us to concentrate on our strategic priorities and provide flexibility to accelerate hiring in key areas, we have made the decision to reduce our current worldwide headcount by approximately five per cent,” the former Autodesk boss said during a conference call less than six months after Yahoo! announced a 10 per cent workforce shrinkage. “I want to be clear this is not the kind of across-the-board cost reduction Yahoo! undertook in Q4 in response to the macro environment.”
The Californian Internet pioneer accounted a net profit in the first quarter of $118 million (£80 million), down from $537 million a year ago, with revenues of $1.58 billion against £1.82 billion. Yahoo! said that revenue in the current quarter would range between $1.425 billion and $1.625 billion. The figures fulfills market expectations and in after-hours trading the shares made small gains.
Yahoo! already reduced about a tenth of its workforce, or about 1,500 jobs, at the end of last year, after slashing 1,000 posts at the start of last year. It finished 2008 with about 13,600 employees.
Bartz, who took over the besieging company from Jerry Yang, the co-founder, in December, forecast that online display advertisement sales, one of Yahoo!’s traditional strengths, would return after dipping sharply in the recession. She said: “With our leading audience properties, substantial reach and innovative advertising solutions, we are confident Yahoo! will be well positioned when online brand advertising resumes its growth.”
“It is a natural consequences of the work we are doing to streamline our structure, globalize products, reduce our portfolio, and eliminate duplication of efforts,” she added.
Instead of an across-the-board cut, approximately 700 people will lose their jobs. And lame duck chief financial officer Blake Jorgensen could not help except blaming the “macro environment” for the company’s, shall we say, lackluster first quarter. “A difficult economic environment,” he said, “affected all aspects of our global business.”
The current layoff is aimed at paving way for new hiring and investments in the company’s bigger Internet properties.
“We have good engineers but have to hire more and get them focused on the right stuff. It is probably the most important thing Yahoo is going to do to really become a big strong growing international company,” Bartz said during a conference call to discuss the company’s lackluster first-quarter results.
Bartz, who is establishing a reputation for herself as a plain speaker, indicated at who among her staff was going to be laid off. Referring to too many people working on the product side of the company, she said: “We had a lot of people running around telling people what to do, but nobody was doing anything.”
More importantly, she said the company will hire engineers to bring Yahoo’s major properties under a unified global platform rather than its current variety of different systems for different countries. Today’s scattered technology infrastructure has prevented Yahoo from adapting quickly and adding new features, especially outside the United States, she said.
And Bartz further warned that the revamp is not going to be complete soon.
“To fully universalize all our platform is probably a couple-year program," Bartz said. “You can not underestimate the past focus the company had on the U.S. market…The international properties almost had to fend for themselves.”
As an example, Bartz indicated to a revamped Yahoo Music site that opens up to content from YouTube, iTunes, Amazon, and other sites and lets Yahoo members share their music-related activity with their friends. That revamp was not possible internationally, she said.
Like Google, Yahoo! has mentioned that in response to the worldwide recession, companies are diverting their ad dollars away from display to search. “Large advertisers, across many vertical categories, are re-evaluating their marketing approach, spending less on brand advertising and directing more dollars into performance marketing,” Jorgenson said just three months ago.
However, as Google vigorously expanding its services into telephone, Web browsers, mobile phone operating systems, general-purpose cloud computing infrastructure, and a vast number of other projects, Bartz is keeping Yahoo focused on its core assets: a number of high-traffic Web properties.
Bartz specifically pointed to Yahoo’s home page, sports, news, finances, mail, search, mobile, and entertainment sites as the companies focus, saying the company will deliver a “wow experience for our users.”
In an attempt to convince the world that the company’s future is bright, she even resorted to the use of outdated American slang. “While the economy will clearly remain a challenge for us, I believe our job is to focus on what we can control and what will move the needle long-term and that is creating kick-ass experiences for our customers.”