Yahoo to cut 5 percent of jobs
SAN FRANCISCO (Reuters) - Yahoo Inc said it would cut 5 percent of its global workforce and reported a quarterly profit that met Wall Street expectations, sending shares up 4.5 percent in a relief rally.
The Internet company said economic conditions remained challenging, as revenue from advertising on Yahoo websites and its partner websites declined during the first quarter.
But the company appeared to be making progress controlling costs, offsetting the decline in revenues, as new Chief Executive Carol Bartz seeks to revive Yahoo's fortunes.
"People were really looking at the profit structure of the business and for things not to be falling apart," said Kaufman Brothers analyst Jason Avilio.
Yahoo said last October it would cut about one-tenth of its workforce, or about 1,500 jobs. The company finished 2008 with roughly 13,600 employees and said it would take severance charges from the new round of layoffs during the second quarter.
Yahoo said its operating cash flow, excluding certain items, was $409 million in the first quarter, at the high end of the $365 million to $415 million range it forecast in January.
Yahoo shares were up 64 cents at $15.02 in after hours trading on Tuesday. The company's stock is up roughly 10 percent from its Monday close of $13.66.
The Internet company said it would also continue to implement unspecified "non-headcount cost reductions," so it can increase its ability to make strategic investments and target hiring in its core operations.
"It's crucial that management adjusts the cost structure to the new growth (or lack thereof) realities; so margin protection is paramount to Yahoo right now," Youssef Squali, an analyst at Jefferies & Co, said in an email. "We think there is potential outperformance on margins."
In the first full quarter under Bartz's leadership, Yahoo generated revenue of $1.58 billion, down 13 percent from the year-ago period.
Excluding traffic acquisition costs (TAC), Yahoo's revenue was $1.16 billion, compared with the average analyst expectation of $1.2 billion, according to Reuters Estimates.
The Sunnyvale, California-based company reported a net profit in the first quarter of $118 million, or 8 cents a share -- down from $537 million, or 37 cents a share, a year earlier. Wall Street analysts, on average, had forecast earnings at 8 cents a share, according to Reuters Estimates.
Chief Financial Officer Blake Jorgensen told Reuters there were "still very dark clouds on the horizon" for the economy.
"I'll try to resist calling the bottom in any way," he said in a telephone interview.
Yahoo projected that sales in the current quarter would range between $1.425 billion and $1.625 billion.