Yahoo plans to cut costs

Yahoo will announce Monday that it will cut the costs of the troubled internet company. Several business units will be divested and up to 15 percent of the workforce will be laid off.

The Wall Street Journal has learned this from a reliable source. It is said that CEO Marissa Mayer will share this in a video later today. By making Yahoo smaller, Meyer buys time from investors in the fight with hedge fund Starboard Value LP. to fight further. The hedge fund is aiming for new management and a sale of the company or parts thereof before March 26.

In October, Mayer had already announced that the company would focus on fewer different areas, without going into further detail. Yahoo has been trying to sell shares of Chinese trading site Alibaba for some time.

Verizon Communications has already made it clear publicly that it has an interest in buying the company. Verizon then wants to combine the advertising branch of Yahoo with that of AOL. Verizon bought AOL in 2015 for $4.4 billion. Lowering costs could make Yahoo a better acquisition candidate, the WSJ continues.

Costs at Yahoo are still rising, but revenues are falling. Much of the increased cost is due to deals Yahoo made with Mozilla and Oracle to drive traffic to the search engine. With just under 11,000 employees, Yahoo earns about $345,000 per employee, which is less than Twitter, which has about 359,000 revenue per employee. Alphabet and Facebook are well above that with 895,000 and more than a million per employee.

Analysts expect Yahoo’s 2015 pre-tax profit to fall below $1 billion for the first time in six years. Revenues for the last quarter are expected to increase by one percent to $1.19 billion from a year earlier.

An internal project to build a better search engine specifically for mobile phones is expected to be announced more, a source told WSJ.