Yahoo undergoing extreme makeover, CEO says
Posted
Jan 29 2008, 04:31 PM
by
Kim Peterson
Tech's favorite punching bag is taking another beatdown today with declining earnings and disappointing guidance. And that means it's time to buy.
Yep, I'm talking about Yahoo, whose shares came dangerously close to a 52-week low in late trading after reporting that Q4 profit dropped to 15 cents a share from 19 cents a year earlier. And while that's bad, at least it was better than the paltry 11 cents a share analysts were expecting.
Yahoo sales were solid, with revenue rising 8% to 1.8 billion. Taking out shared-partner ad sales, its revenue was $1.4 billion, which is what analysts expected.
Shares fell this afternoon on Yahoo's guidance. The company said Q1 revenue should be between $1.28 billion to $1.38 billion (the Street wanted $1.37 billion) and predicted full-year revenue would be between $5.35 billion to $5.95 billion (the Street wanted $5.9 billion.)
CEO Jerry Yang said the company is in the middle of a huge makeover.
"We're making profound, fundamental changes to virtually all aspects of our business," he said in a conference call. "This sort of transformation takes time."
Yahoo confirmed it will cut 1,000 positions in what Yang called a "workforce realignment". Yahoo will make "targeted reductions" rather than across-the-board cuts, he said.
Further comments by Yang and CFO Sue Decker suggested the following areas are safe: mail, search, mobile, news, sports, finance and the "My Yahoo" personalization services.
On the chopping block or being "deemphasized": photos, social networking portal 360, podcasts, premium entertainment services (like music) and PC calling tools.
As I've said in the past, Yahoo's weak share price could signal a buying opportunity. The company may have slowed its search market share losses, and its falling market cap makes it a more desirable acquisition candidate. Yahoo is making progress on mail and mobile, and shedding underperforming areas will likely free up money for more innovation.
