Yahoo posts £69 million first-quarter loss
Technology giant Yahoo has posted a first-quarter loss of 99 million dollars (£69.2m) on the back of a sharp drop in net revenue, a figure that subtracts ad commissions from total turnover.
Yahoo's net revenue fell 18% from year-earlier period to 859 million dollars (£600m). It is the largest decline in Yahoo's quarterly net revenue since the company hired Marissa Mayer as its CEO nearly four years ago.
The company expects an even bigger net revenue drop of 20% in the quarter ending in June.
Yahoo's first-quarter loss compares to a 21 million-dollar (£14.6m) profit last year. A big chunk of the loss stemmed from the cost of shedding about 1,000 workers during the quarter, a cut that chopped the company's workforce to 9,400 employees as of March.
That purge was part of a cost-cutting plan drawn up by Ms Mayer that includes closing some of the unprofitable services started up under her reign.
Investors, however, are much more focused on whether the company is going to sell the bulk of its operations or not.
The Sunnyvale, California, company announced two months ago that it was considering the sale of part or all of its internet business instead of sticking with Ms Mayer's cost-cutting plan.
In a review of the first-quarter results, Ms Mayer described the sales negotiations as a "top priority" and said the board was moving on an "aggressive calendar" to complete the process. She did not provide a specific timetable.
Her comments aimed to debunk reports that Yahoo's board is making only a half-hearted effort to attract bidders because she and the rest of the directors would prefer the company remains independent.
Verizon Communications has publicly said it is interested in buying Yahoo. It snapped up another fallen Internet star, AOL, for 4.4 billion dollars (£3bn) last year. The Daily Mail in London has also said it was considering a bid. Analysts believe private equity firms that specialise in buying and turning around troubled companies are interested.
Estimates on the value of Yahoo's internet operations have ranged from 4-10 billion dollars. Properties on the block include Yahoo's widely used email service, digital advertising tools and its still popular finance and sports sites.
Backing Ms Mayer following the flop of her previous turnaround efforts would only alienate investors further, said Mizuho Securities analyst Neil Doshi.
"They have lost a lot of credibility," he said.
Yahoo's stock has rallied over the past two month amid expectations that it will divest its internet operations. That would leave Yahoo as a holding company with valuable stakes in China's e-commerce leader, Alibaba Group, and Yahoo Japan.
Yahoo shares gained 47 cents to 36.80 dollars in Tuesday's extended trading.
Ms Mayer and the rest of Yahoo's board could be ousted if the company does not sell and its financial results continue to worsen. Activist investor Starboard Value has nominated a slate of candidates to replace Yahoo's nine-member board in an election at the company's annual meeting, which may be held in late June.
In an interview on CNBC, Starboard CEO Jeffrey Smith said he was trying to negotiate a settlement that would give his hedge fund several seats on Yahoo's board ahead of the annual meeting.
If there is not a settlement, Mr Smith said he was prepared to lead a mutiny so an entirely new board could "pick up the pieces".