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July 18, 2016

Are further Yahoo job cuts on the way after sale of internet assets?

News: The layoffs could be driven by its excessive size.

By CBR Staff Writer

Technology giant Yahoo could cut hundreds of jobs following its sale, as its revenue per employee is significantly lower than major companies.

While Alphabet had $315,948 in sales per worker in the March quarter, Facebook generated nearly $400,000.

In contrast, Yahoo was able to report less than $116,000 in revenue per employee, Bloomberg reported.

Even when compared with telecom companies, which are traditionally massive in size, Yahoo’s structure is bulkier.

Verizon Communications earns $185,637 in sales per worker, while AT&T garners $144,319.

Yahoo’s bloated size was a result of heavy spending on acquisitions and hiring to control falling sales.

 According to analysts, the new owners of Yahoo are expected to cut at least another 3,000 jobs.

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Yahoo CEO Marissa Mayer has already shrunk the company’s workforce by a third in the past four years.

Suntrust Robinson Humphrey analyst Robert Peck was quoted by the publication as saying: “We still think it has some bloated costs that could be taken out.”

Peck estimated that slashing additional 1,000  jobs would make Yahoo’s revenue-per employee similar to that of Verizon’s AOL.

Peck added that a strategic buyer of Yahoo such as Verizon or AT&T may cut its employee count by another 3,000 due to excessive redundancies in areas such as human resources or marketing.

Yahoo is expected to report a sharp fall in revenue and profit for the second quarter of this year.

The company is readying to invite bids for its internet properties on 18 June, people familiar with the matter told Bloomberg.

Activist investor SpringOwl Asset Management said that job cuts should result in a reduction of Yahoo’s workforce to 3,000 people based on a proposal announced last year.

SpringOwl managing director Eric Jackson said that reducing employee size to 4,000 to 5,000 people “would also be acceptable.”

As of 31 March 2016, Yahoo employed 9,400 people.

 In June, Reuters reported that AT&T and Verizon Communications were set to make final round of bids for Yahoo's Internet business.

The report said Verizon was planning to challenge AT&T in the third round of bidding, even though its bid of over $3.5bn was topped by other offers at or above $5bn.

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