AABA Altaba Inc

By Douglas MacMillan and Dana Mattioli 

Yahoo Inc. on Tuesday announced plans to eliminate roughly 15% of its workforce and explore "strategic alternatives" for its struggling Internet business, in the strongest indication yet that the company's board is considering a sale of its Web properties.

The announcement accompanied Yahoo's fourth-quarter report in which the company reported a loss of $4.4 billion, hurt by write downs on Tumblr and other assets, as revenue grew 1.6% to $1.27 billion.

Yahoo said that by the end of 2016, it anticipates having about 9,000 employees and fewer than 1,000 contractors, which represents a workforce that is roughly 42% smaller than it was in 2012. The company sees the cuts resulting in savings of $400 million a year.

The company also said it has begun to explore divesting nonstrategic assets, such as patents, the sale of real estate, and other noncore assets. Through the end of the year, the company estimated that these efforts could generate between $1 billion and $3 billion in cash.

In addition, Yahoo Chairman Maynard Webb said in a news release, "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."

Yahoo's declaration that it is considering options could open the door to a bidding war between media conglomerates, private-equity firms and wireless carriers, which have all expressed interest in purchasing all or part of the company.

A sale process also may signal the end of Chief Executive Marissa Mayer's flailing attempt to turn around Yahoo, whose costs have risen while revenue has shrunk in the 3 1/2 years since she took the reins.

Her efforts were complicated in recent months by an exodus of top managers and growing impatience from investors, including hedge-fund activist Starboard Value LP, who has called for new leadership and a sale of the company. The firm has threatened to wage a proxy battle if its requests aren't met.

Yahoo also said Tuesday that finance-industry entrepreneur Charles Schwab is resigning from its board, effective immediately. Mr. Schwab was among the seasoned executives Ms. Mayer added to the board as she put her own stamp on its governance.

Mr. Schwab, whose departure will leave the Yahoo board with seven directors, pointed to his other professional commitments and demands on his time and said his departure wasn't related to any disagreement with the company.

Shares of Yahoo, down 35% over the past year, fell 1.8% to $28.53 in after-hours trading.

For the fourth quarter, Yahoo reported a loss of $4.435 million, or $4.70 a share, which included a charge of $4.46 billion from writing down the value of its U.S. & Canada, Europe, Latin America and Tumblr reporting units. The company said the goodwill impairment resulted from a combination of factors, including decreases in its market capitalization, projected operating results and estimated future cash flows.

Excluding all charges, the company's earnings fell to 13 cents a share from 30 cents but were in-line with analyst estimates.

Yahoo said that as a result of its restructuring plan, it expects to return to modest and accelerating growth in 2017 and 2018. The plan includes simplifying its product portfolio "to emphasize the products that distinguish the company competitively and drive the most substantial portion of users, revenue, and market opportunity."

For consumer products, Yahoo will consist of three global platforms: search, mail, and Tumblr, and it will focus on covering news, sports, finance and lifestyle in growth markets like the U.S., Canada, U.K., Germany, Hong Kong and Taiwan.

For advertisers, Yahoo will provide two core offerings: Gemini and BrightRoll. Gemini combines search and native ads, while BrightRoll offers programmatic buying and selling tools for video, display and native advertising.

Yahoo added that its planned job cuts include leaving five offices in Dubai, Mexico City, Buenos Aires, Madrid, and Milan, subject to local laws and consultation processes.

The planned job cuts, besides lowering costs, could make the company more attractive to a potential buyer. Executives at Verizon Communications Inc. have publicly expressed interest in buying Yahoo, and others, including firm private-equity firm TPG Capital, have considered bidding for parts or all of the Web business, according to people familiar with the matter.

In December, Ms. Mayer and Chairman Maynard Webb said in an interview that a sale isn't the most likely outcome. But Mr. Webb said then that the board has a fiduciary duty to entertain any offers.

Yahoo reiterated Tuesday that separating its Alibaba stake from its operating business continues to be a primary focus. As the company indicated in December, among the alternatives being considered, is a so-called reverse spinoff that would turn the Web assets and a stake in Yahoo Japan into a separate, publicly traded company.

Write to Douglas MacMillan at douglas.macmillan@wsj.com and Dana Mattioli at dana.mattioli@wsj.com

(END) Dow Jones Newswires

February 02, 2016 17:57 ET (22:57 GMT)

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