Yahoo on Tuesday announced it would consider a reverse spin-off and cut about 15 percent of its workforce as part of a turnaround plan to revive its struggling Internet business. Yahoo's board also said it would consider "additional strategic alternatives," hinting that a sale was not out of the question.
The tech company also posted quarterly results broadly in line with analysts' expectations. Yahoo reported adjusted fourth-quarter earnings of 13 cents per share on $1.27 billion in revenue. Analysts expected Yahoo to report earnings of about 13 cents per share on $1.19 billion in revenue, according to a consensus estimate from Thomson Reuters.
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In addition to the 1,700 layoffs, which are expected to happen in the first quarter, Yahoo plans to close five offices and explore selling some non-strategic assets. The company expects annual savings of about $400 million from the moves.
Yahoo also aims to make its platforms more attractive to advertisers and improve sales and profitability.
"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."
"The Board is committed to the turnaround efforts of the management team and supportive of the plan announced today,” 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."
Rumors have swirled about Yahoo's plans since it announced in December it would not complete the planned spin-off of its stake in Chinese e-commerce giant Alibaba. Yahoo has reportedly considered selling its core Internet business, and the company has faced pressure from activist investor Starboard Value.
During her tenure, Mayer has focused on growth in mobile, video, native advertising and social. For the fourth quarter, the collective unit saw $472 million in sales, up from $375 million in the previous year.
Mobile revenue climbed to $291 million from $254 million. But gross search revenue fell 7 percent from the previous year to $866 million.
Yahoo shares have fallen about 35 percent in the last year.