By the end of 2016, Yahoo expects to have about 9,000 employees and fewer than 1,000 contractors.
The tech company has struggled in recent times to keep up with the likes of Facebook and Google while Ms. Mayer has been under pressure recently to quit as chief executive.
Yahoo, based in Sunnyvale, California, said it plans to lay off about 1,500 employees and exit five offices in Dubai, Mexico City, Buenos Aires, Madrid and Milan.
The company says the cutbacks alone could generate a billion dollars, however Yahoo shares continued to fall following the announcement.
Marissa Mayer announced that by the end of this year, Yahoo will trim fifteen percent of its workforce. A year earlier, the company generated a net income of $166.3 million, or $.17 per share.
Mayer dismissed accusations of excessive spending, saying a report of a $7 million bill for Yahoo’s holiday party was exaggerated by a factor of three.
Yahoo’s revenue – after deducting fees paid to partner websites – fell to $1.00 billion from $1.18 billion.
SpringOwl Asset Management, in particular, believes that Mayer should also be removed from her post, on top of the layoffs; the firm believes that Yahoo should only be employing about 3,000 workers at this point, on account of a slow and steady decline in revenue. They have now fallen 36% over the past 12 months.
“We don’t think there is anything in the announced restructuring and potential non core asset sales that will mollify activist investors”, said Barclays Capital analyst Paul Vogel in a note to clients, following the announcement of the turnaround plans and fourth quarter results.
It would also close down services including Games and Smart TV, and Yahoo Screen, and simplify its product portfolio to three platforms – Search, Mail, and Tumblr – besides focussing on specific verticals of news, sports, finance and lifestyle.
The main idea, as Webb noted, is to separate Yahoo’s stake in Chinese eccomerce giant Alibaba Group Holdings Ltd.by selling off or spinning off its Internet businesses. The company hopes that the plan will see modest and accelerating growth in 2017 and 2018. Yahoo cited mobile search as its largest opportunity and said it would move most of its resources toward forward-leaning investments that differentiate its product in that space.