Yahoo! cuts 2,000 jobs to reduce costs in turnaround effort

Yahoo! Inc, the largest US Web portal, is eliminating about 2,000 jobs, or 14 per cent of its workforce, to help Chief Executive Officer Scott Thompson cut costs and refocus the company.

The company will get savings of about $375 million annually from the cutbacks, Sunnyvale, California-based Yahoo! said on Wednesday in a statement. Yahoo!, which had 14,100 full-time employees at the end of last year, expects to record a pretax expense of $125 million to $145 million — with the majority coming in the second quarter.

Thompson, who took over as CEO in January, is reorganising operations in a bid to increase profit and reverse a sales slump. Yahoo!’s failure to keep pace with Facebook Inc and Google Inc in online advertising and social media has led to management upheaval, including the departures of Chairman Roy Bostock and co-founder Jerry Yang, and the ouster of CEO Carol Bartz.

“Today’s actions are an important next step toward a bold, new Yahoo! — smaller, nimbler, more profitable and better equipped to innovate as fast as our customers and our industry require,” Thompson said in a statement. “We are intensifying our efforts on our core businesses and redeploying resources to our most urgent priorities.”

Yahoo!’s revenue, excluding sales passed to partner sites, declined to $1.17 billion in the fourth quarter. Income from operations in the current period will be $105 million to $155 million, Yahoo! said, shy of the $184.2 million that analysts had projected, according to data compiled by Bloomberg.

Yahoo is scheduled to announce first-quarter results on April 17.

Thompson was formerly the president of EBay’s PayPal unit. There, he helped more than double revenue at the payments service while boosting the user base to more than 100 million.

At Yahoo, he¿s grappling with a planned proxy fight by investor Third Point LLC, which owns about 5.8 percent of the company. The investment firm is trying to get four nominees, including Third Point CEO Daniel Loeb, onto Yahoo¿s board.

Yahoo added three new independent directors last month, after failing to reach an agreement with Third Point to put some of the investor¿s picks on the board. Yahoo also added two directors in February, while announcing that Bostock and three other members wouldn¿t seek re-election.