Yahoo’s Financial Woes are a major cause for concern for investors and Yahoo! employees as revenues decrease and stocks decline by 40%.
If you’re a Dennis Quaid fan like me, you might be familiar with a campy sci-fi film called Frequency. It’s the story of a firefighter (Quaid) who dies in a 1969 inferno and his son who 30 years later happens upon a cross-time radio link that somehow lets him contact his dad prior to the fire, thereby saving his life. It’s a cheesy and forgettable film, except for a small subplot in which the son in the year 1999 speaks to his 1969 childhood friend Gordo over the time radio, and tells him to remember one word, “yahoo.” Jump to the end of the film, and Gordo is now a grown-up millionaire and a major Yahoo Inc shareholder.
If a sequel were made today, Gordo might be a down-on-his-luck ex-tycoon feeling much regret over not selling his Yahoo stocks back in 2008. Yahoo was the first widely successful Internet search engine, but it reached its peak roughly eight years ago. Google had already secured itself as the top dog and other companies like Bing and Ask were making names for themselves as well. Yahoo stayed competitive, but revenues began to shrink. In 2012, there was a company shakeup and nearly 14 percent of its employees were let go in order to save millions annually. The top brass hoped the move would keep Yahoo afloat, and for a while, it did.
Turn the page to 2016, and Yahoo is floundering again. The stock is down by nearly 40% and investors are urging Yahoo execs to either sell the company or face a proxy war to replace their seats. In light of these developments, Yahoo announced on Tuesday a new four-pronged strategic plan to narrow its focus. As part of its plan, Yahoo will be to closing five of its overseas offices and discontinuing certain underperforming products.
The grittiest aspect of the plan is the proposed reduction of Yahoo’s workforce by 15 percent. This step will save an estimated $400 million annually in short term operating expenses. It’s a move reminiscent of Yahoo’s employment cut in 2012. Of course, the company’s head honchos are hoping for far better results this time around. Yahoo is a “far stronger, more modern company than the one I joined three and a half years ago”, insisted Yahoo CEO Marissa Meyer earlier this week, but the proof is in the pudding and right now, the pudding is looking more than a tad lumpy.