San Francisco — The battling Sunnyvale, Calif., Internet Company Yahoo Inc. is expected to announce its fiscal third-quarter financial results after the market’s close Tuesday, according to people familiar with the matter reported Sunday in the Wall Street Journal. The cuts will involve layoffs, among other things, these people say.
The exact number of jobs to be eliminated remains unclear, though it is expected to come from all departments in the 14,300-employee company, according to the report. The company is likely to exceed the 1,000 jobs that Yahoo announced it was cutting in January, say people familiar with the subject.
Exactly which jobs will be expunged is not expected to be announced for at least a few weeks, say these people, though Yahoo, has reportedly asked managers to identify areas where the company can achieve operating budget reductions of 15 percent. In January, Yahoo laid off an estimated 1,100 employees in a bid to cut costs and trim operations that were underperforming as well as others.
The San Jose Mercury News and several technology-industry Web sites have reported that Yahoo is planning job cuts.
Reports of job cuts at Yahoo have been flowing for weeks, with Alley Insider’s Henry Blodget calling for the elimination of 3,000 jobs at the company.
Rumors also have been circulating that the company may yet see another acquisition offer from Microsoft Corp.
Analysts, on average, estimate Yahoo will post earnings of 8 cents a share for the period ended in September on $1.37 billion in net revenue, according to FactSet Research.
Earlier this year, Yahoo spurned a $33 per share, or $47.5 billion, takeover offer by Microsoft Corp. Since then, Yahoo has shuffled its management team and announced new products to try to boost its flagging stock price. Yahoo recently hired consultants Bain & Co. to help identify potential “structural changes.”
But, these changes have done little to advance the company’s accomplishment or restore investor and employee confidence in managers, including Yahoo chief executive Jerry Yang, who some shareholders blame for Yahoo’s rejection of Microsoft’s offer.
Shares of Yahoo closed on Friday at $12.90, down 9 cents, on Nasdaq.
However, Yahoo’s shares have been under terrific pressure lately, closing at $12.90 on Friday. Just a week before that, the Internet giant’s stock traded as low as $11.37, its lowest price since March 2003. Yahoo, as a result, also now has a market cap of $17.88 billion.
The results come as analysts are making unpleasant forecasts for the online display-advertising market, a specialty of Yahoo’s.
Yahoo’s moves come as the financial instability is spurring belt-tightening across the country. But the Internet Company’s pain is more acute. Yahoo is scrambling to bounce back from years of disappointing revenue and profit growth as it has seen rivals such as Google Inc., News Corp.’s MySpace.com and Facebook Inc. grab more growth in the Internet sector.
Yahoo also tries to weigh a combination with Time Warner Inc.’s AOL, The Wall Street Journal reported. The two sides have begun to discuss a value for AOL below the $8 billion to $10 billion that had previously been considered.
Meanwhile, one enterprising move pursued by Yahoo following the end of merger talks with Microsoft has been a search-advertising partnership with Google, which is designed to help Yahoo generate hundreds of millions of dollars in additional revenue has run into a regulatory hitch.
The proposed pact would have Google fielding searches made on Yahoo sites, matching them with advertisements and splitting the resulting revenue. After many large advertisers objected to the deal, which they fear could raise online ad prices; Google has been talking to the Justice Department about revising the agreement to prevent regulators from thwarting it, say people familiar with the matter.
But Yahoo and Google earlier this month announced that they were delaying implementation of the deal, due to an ongoing antitrust investigation by the Justice Department.
Google and Yahoo are the No. 1 and 2 players in online search in the United States, respectively.
Results posted Thursday by Yahoo rival Google Inc. may promise well for the Web portal’s search-advertising business. Google, which dominates online search, posted a profit for the period ended in September that topped analysts’ estimates.
However, after Microsoft Chief Executive Steve Ballmer said Thursday at a technology conference that some sort of Web-search advertising deal with Yahoo Inc. made economic sense and may still be possible for shareholders, though the two sides are not in any discussions, Yahoo shares surged.
The stock gave up some of those gains Friday, falling slightly to close at $12.90.
Yahoo also draws a significant amount of revenue from international markets, including Japan and Canada.
Marianne Wolk, an analyst with Susquehanna Financial Group, maintains that given the economic climate, 10% to 15% budget cutbacks for Yahoo would be “sensible.” But she added that such moves would do little to address the company’s bigger problems such as an exodus of employees and a broader “graphical advertising business that appears to be in freefall.”
Cowen & Co. analyst Jim Friedland on Wednesday cut his estimates for Yahoo’s third quarter, citing “a weaker macro outlook” and a strengthening U.S. dollar.
Yahoo’s quarterly result comes at an unfortunate time, as the online giant attempts to convince shareholders that it can thrive independently.
Yahoo was not immediately available to comment.