Board To Pursue Reverse Spin Concurrent With
Other Strategic Alternatives
Yahoo! Inc. (NASDAQ: YHOO) will announce today an aggressive
strategic plan to simplify the company, narrowing its focus on
areas of strength to better fuel growth, drive revenue and increase
efficiency in 2016 and beyond.
Collectively, the strategic plan aims to:
- Improve consumer and advertiser product
quality and grow daily active users (DAUs)
- Drive continued growth in revenue
realized through Mavens (mobile, video, native and social) to $1.8
billion this year,
- Improve profitability to reach an
adjusted EBITDA run rate of approximately one billion dollars by
the second half of 2016
- Reduce operating expenses by more than
$400 million by the end of 2016
- Limit GAAP revenue impact of product
and regional exits to approximately $100 million
- Explore non-strategic asset
divestitures that, if consummated, could generate in excess of $1
billion in cash, and
- Deliver increased value to
shareholders, advertisers, and the more than one billion people who
use Yahoo’s products and services.
“Today, we’re announcing a strategic plan that we strongly
believe will enable us to accelerate Yahoo’s transformation,” said
Marissa Mayer, CEO of Yahoo. “This is a strong plan calling for
bold shifts in products and in resources. We are extremely proud of
the billion dollar plus business we have built in mobile, video,
native, and social. Our strategic bets in Mavens have enabled us
build an entirely new, forward-leaning business of tremendous scale
and growth in just three years. The plan announced today builds
from that achievement and will dramatically brighten our future and
improve our competitiveness, and attractiveness to users,
advertisers, and partners.”
"The Board is committed to the turnaround efforts of the
management team and supportive of the plan announced today. We have
tremendous respect for the thousands of Yahoos who work very hard
to make the world a better place,” said Maynard Webb, Yahoo’s
Chairman of the Board. “The Board also believes that exploring
additional strategic alternatives, in parallel to the execution of
the management plan, is in the best interest of our shareholders.
Separating our Alibaba stake from our operating business continues
to be a primary focus, and our most direct path to value
maximization. In addition to continuing work on the reverse spin,
which we’ve discussed previously, we will engage on qualified
strategic proposals.”
Strategic Plan for Growth
On this afternoon’s fourth quarter and year end 2015 earnings
call, Yahoo will lay out a go-forward plan for accelerating growth
at the Company through four key objectives:
- Play to Strengths to Grow User
Engagement. Yahoo has grown into a guide to digital information
discovery for more than one billion monthly active users. In 2016,
the Company will prioritize growing engagement with its enormous
user base. Yahoo will simplify its product portfolio to emphasize
the products that distinguish the Company competitively and drive
the most substantial portion of users, revenue, and market
opportunity. This focus will increase the pace of innovation and
product improvement, deliver a more deeply integrated Yahoo
experience and more quickly grow key metrics such as page views,
logged in users, and DAUs.For consumer products, Yahoo will consist
of three global platforms: Search, Mail, and
Tumblr, and four verticals: News, Sports,
Finance and Lifestyle in growth markets like the
U.S., Canada, U.K., Germany, Hong Kong, and Taiwan. For
advertisers, Yahoo will be defined by two core offerings:
Gemini and BrightRoll. Gemini combines search and
native ads for superior results, while BrightRoll offers
programmatic buying and selling tools for video, display and native
advertising.For Yahoo’s search business, mobile search is the
biggest opportunity. The Company will shift most of the resources
in this area toward more forward-leaning mobile search investments,
positioning it to redefine search for mobile devices, which will
help drive sustainable long-term growth and differentiation.Yahoo
Mail is the heart of the Company’s communications products. To
continue to grow DAUs and increase engagement, investment in Yahoo
Mail will be used to improve speed and stability, as well as add
features that make it easier for users to share, search and connect
through the platform. As an essential driver of the Company’s
entire product portfolio, focused investment in Yahoo Mail will
help accelerate growth across the business.For the Tumblr platform
and Yahoo’s digital content strongholds of News, Sports, Finance,
and Lifestyle, investment will be focused on growing user
engagement, especially on mobile. The Company will invest in
features and experiences that engage users as both consumers and
creators of content, encouraging them to do more with, and
therefore spend more time on, the Yahoo network.
- Drive Mavens Revenue Growth.
Yahoo will continue to invest in the Mavens strategy to
counterbalance legacy business declines with an emphasis on mobile.
Mavens revenue exceeded $1.6 billion in GAAP revenue in 2015, a 45
percent year-over-year increase that surpassed our forecast. Focus
on engagement growth and improved monetization for the core
consumer products, together with the syndication of mobile tools
through the Yahoo Mobile Developer Suite, Yahoo expects to drive
long-term sustainable revenue growth and reach more than $1.8
billion in Mavens GAAP revenue in 2016.Advertiser spend in Mavens
areas is projected to increase significantly. Mobile industry ad
spend is anticipated to nearly double by 2018, and programmatic
technology has become the proven advertising solution for optimal
performance, pricing and control. In response to these trends,
Yahoo’s global sales team has already begun to shift toward
performance and programmatic offerings and the Company has already
seen the benefits of this in Q4. This strategy, plus the work
that’s been done over the last two years with Mavens-focused ad
formats and investment in Gemini and BrightRoll platforms,
positions Yahoo well to ride these trends toward sustainable
growth.
- Simplify the Business to Improve
Execution. In 2016, a smaller product portfolio emphasizing
Yahoo’s core strengths will yield better focus, execution, and
ultimately clearer value to shareholders, advertisers and users.
Since 2012 the Company has invested across different product areas
and markets to drive innovation and fuel growth and now it will
align resources towards proven growth areas. In Q4 the Company
closed Yahoo Screen and shifted away from original scripted
content. In 2016, Yahoo will consolidate some Digital Magazines
under one of our four core verticals, while others will be shut
down. The Company will also exit legacy products, including Games
and Smart TV, which have not met growth expectations. A simpler
product portfolio more focused on Yahoo’s strengths will allow the
Company to more quickly improve offerings to increase
profitability.In addition to a clarified product portfolio, Yahoo
has begun to explore divesting non-strategic assets of value such
as the responsible monetization of non-strategic patents, the sale
of valuable real estate, and other non-core, non-strategic assets.
Through the end of the year, the Company estimates that these
efforts could generate between one and three billion dollars in
cash.
- Efficiently Align Resources.
Yahoo’s plan reflects the Company’s goal to continue to spend
thoughtfully, operate effectively, and drive profitability. As part
of this plan, the Company has begun executing on a number of
additional cost-savings efforts. Since 2012, Yahoo has already made
significant strides to manage headcount and achieve stability with
fewer employees. Yahoo values everyone who has dedicated themselves
and made contributions to the Company. The changes in the employee
footprint have not been easy, but are necessary to position the
Company for a stronger future.To that end, Yahoo plans to reduce
our workforce by roughly 15 percent and exit five offices in Dubai,
Mexico City, Buenos Aires, Madrid, and Milan, subject to local laws
and consultation processes. It’s expected that most of these
changes will take place in Q1, but by the end of 2016, the Company
anticipates having approximately 9,000 employees and fewer than
1,000 contractors. This represents a workforce that is roughly 42
percent smaller than it was in 2012 and will result in savings in
short term operating expense of $400 million annually. Yahoo does
not take this decision lightly and will make every effort to handle
the process with thoughtfulness, transparency, and compassion.
As a result of this four-point plan, Yahoo is expected to return
to modest and accelerating growth in 2017 and 2018. Yahoo’s
leadership and Board together believe that by taking these steps,
the Company will more quickly realize a significant and positive
impact on the trajectory of its transformation.
About Yahoo
Yahoo is a guide focused on informing, connecting, and
entertaining our users. By creating highly personalized experiences
for our users, we keep people connected to what matters most to
them, across devices and around the world. In turn, we create value
for advertisers by connecting them with the audiences that build
their businesses. Yahoo is headquartered in Sunnyvale, California,
and has offices located throughout the Americas, Asia Pacific
(APAC) and the Europe, Middle East and Africa (EMEA) regions. For
more information, visit the pressroom (pressroom.yahoo.net) or the
Company's blog (yahoo.tumblr.com).
This press release contains forward-looking statements
(including, without limitation, the quotations from management)
concerning Yahoo's strategic plan, operational improvements and
cost efficiency measures and their projected impact on Yahoo’s
future growth and results of operations, as well as Yahoo’s review
of strategic alternatives, including the separation of its
remaining holdings in Alibaba Group Holding Limited. Risks and
uncertainties may cause actual results to differ materially from
the results predicted, and reported results should not be
considered as an indication of future performance. The potential
risks and uncertainties include, among others, risks related to
Yahoo’s ability to continue to grow its mobile users and revenues;
risks related to Yahoo’s ability to continue to grow the Mavens
revenue; risks related to Yahoo’s ability to grow users, user
engagement and pageviews; risks related to acquiring or developing
compelling content; risks related to growing advertiser engagement;
risk of potential reduction in spending by, or loss of, advertising
customers; risks related to Yahoo’s ability to provide innovative
search experiences and other products and services that
differentiate its services and generate significant traffic; risks
related to Yahoo’s ability to dispose of non-core assets on
satisfactory terms; risks associated with strategic efforts to
efficiently align our resources and to manage operating expenses
effectively and improve profitability; risks related to acceptance
by users of new products and services; risks related to Yahoo's
ability to compete with new or existing competitors; risks
associated with the Search Agreement with Microsoft Corporation;
risks related to joint ventures and the integration of
acquisitions; risks related to possible impairment of goodwill or
other assets; risks related to Yahoo’s ability to protect its
intellectual property and the value of its brands; adverse results
in litigation; security breaches; interruptions or delays in the
provision of Yahoo’s services; risks related to Yahoo’s regulatory
environment; risks related to fluctuations in foreign currency
exchange rates; risks related to Yahoo's international operations;
risks related to Yahoo’s ability to recruit and retain key
personnel; dependence on third parties for technology, services,
content, and distribution; risks related to the calculation of our
key operational metrics; and general economic conditions. With
respect to Yahoo’s review of strategic alternatives, including the
separation of the Alibaba stake, there is no assurance that any
transaction or transactions will be consummated, and the potential
risks and uncertainties include, among others, factors affecting
the feasibility and timing of any such transaction or transactions,
including, without limitation, required third party consents and
regulatory approvals; adverse regulatory developments or
determinations or adverse changes in, or interpretations of, U.S.
or foreign tax laws, rules or regulations that could materially
impact or delay or prevent completion of any such transaction or
transactions; and risks related to realization of the expected
benefits of any such transaction or transactions to Yahoo and its
stockholders. All information set forth in this press release and
its attachments is as of February 2, 2016. Yahoo does not intend,
and undertakes no duty, to update this information to reflect
subsequent events or circumstances. More information about
potential factors that could affect the Company's business and
financial results is included under the captions "Risk Factors" and
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" in the Company's Annual Report on Form 10-K
for the year ended December 31, 2014, as amended, and Quarterly
Report on Form 10-Q for the quarter ended September 30, 2015, which
are on file with the SEC and available on the SEC's website at
www.sec.gov. Additional information
will also be set forth in those sections in Yahoo’s Annual Report
on Form 10-K for the year ended December 31, 2015, which will be
filed with the SEC in the first quarter of 2016.
Non-GAAP Financial Measure
This press release includes the Company’s expectations for
adjusted EBITDA, which is a non-GAAP financial measure. Yahoo! Inc.
(together with its consolidated subsidiaries, “Yahoo,” the
“Company,” or “we”) uses this non-GAAP financial measure for
internal managerial purposes and to facilitate period-to-period
comparisons. We describe limitations specific to this non-GAAP
financial measure below. We believe that adjusted EBITDA reflects
an additional way of viewing aspects of our operations that, when
viewed with our GAAP results, provides a more complete
understanding of factors and trends affecting our business. This
non-GAAP measure should be considered as a supplement to, and not
as a substitute for, or superior to, net income attributable to
Yahoo! Inc. (or “net earnings”) calculated in accordance with
GAAP.
Adjusted EBITDA is defined as GAAP net earnings before of taxes,
depreciation, amortization of intangible assets, stock-based
compensation expense, other income, net (which includes interest),
earnings in equity interests, net income attributable to
noncontrolling interests and other gains, losses, and expenses that
we do not believe are indicative of our ongoing results. We present
adjusted EBITDA because the exclusion of certain gains, losses, and
expenses facilitates comparisons of the operating performance of
the Company on a period to period basis. Adjusted EBITDA has
limitations as an analytical tool and should not be considered in
isolation or as a substitute for results reported under GAAP. These
limitations include: adjusted EBITDA does not reflect tax payments
and such payments reflect a reduction in cash available to us;
adjusted EBITDA does not reflect the periodic costs of certain
capitalized tangible and intangible assets used in generating
revenues in our businesses; adjusted EBITDA does not include
stock-based compensation expense related to the Company’s
workforce; adjusted EBITDA also excludes other income, net (which
includes interest), earnings in equity interests, net income
attributable to noncontrolling interests and other gains, losses,
and expenses that we do not believe are indicative of our ongoing
results, and these items may represent a reduction or increase in
cash available to us; and adjusted EBITDA is a measure that may be
unique to the Company, and therefore it may not enhance the
comparability of our results to other companies in our industry.
Management generally compensates for these limitations by also
relying on the comparable GAAP financial measure of net earnings,
which includes taxes, depreciation, amortization, stock-based
compensation expense, other income, net (which includes interest),
earnings in equity interests, net income attributable to
noncontrolling interests and the other gains, losses and expenses
that are excluded from adjusted EBITDA. This measure may be
different than similarly titled measures used by other
companies.
As mentioned above, we expect that the execution of our 2016
plan will cause our Adjusted EBITDA run rate for the second half of
2016 to be approximately $1 billion on an annualized basis. We
expect the comparable GAAP financial measure—GAAP net earnings run
rate—to be lower than such non-GAAP measure as a result of the
inclusion of the following amount in the GAAP metric:
- expected depreciation and amortization
expense run rate of $525 million for the second half of 2016 on an
annualized basis.
However, we are unable to provide a full reconciliation because
we are unable to provide a forward-looking estimate of the other
reconciling items between GAAP net earnings run rate and adjusted
EBITDA run rate, including run rates of stock based compensation;
restructuring charges; other income, net; provision for income
taxes; earnings in equity interests; and net income attributable to
noncontrolling interests; and other potential items such as
advisory fees. Certain factors that are materially significant to
our ability to estimate these run rates are out of our control
and/or cannot be reasonably predicted. Accordingly, a full
reconciliation to GAAP net earnings run rate is not available
without unreasonable effort.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160202006619/en/
Yahoo! Inc.Media Relations Contact:Sarah Meron,
408-349-4040media@yahoo-inc.comInvestor Relations
Contact:Joon Huh, 408-349-3382investorrelations@yahoo-inc.com
Altaba (NASDAQ:AABA)
Historical Stock Chart
From Aug 2024 to Sep 2024
Altaba (NASDAQ:AABA)
Historical Stock Chart
From Sep 2023 to Sep 2024