Last year was a rough one for Yahoo. Now the company is trying to figure out what exactly its future holds.
Yahoo CEO Marissa Mayer today announced a slew of changes at the company in order to prove to investors that it still has a real future as a tech giant. "Today, we're announcing a strategic plan that we strongly believe will enable us to accelerate Yahoo's transformation," Mayer said in a statement. "This is a strong plan calling for bold shifts in products and in resources."
Ahead of the company's quarterly earnings call, Yahoo said it's planning to lay off 15 percent of the company (around 1,700 employees) and close offices in Dubai, Mexico City, Buenos Aires, Madrid, and Milan.
The company is also moving away from creating original TV shows, is consolidating its digital magazines, may sell valuable real-estate, and is shuttering legacy products like Yahoo Games. It will also reorganize the company in an effort to increase its number of users and the time they spend on Yahoo properties, especially on mobiles, by focusing on search, e-mail, and Tumblr, along with four topical verticals, including news, sports, finance, and lifestyle.
Once a major tech force, Yahoo's troubles have steadily mounted in recent years. The company has struggled to compete with newer, more sophisticated tech rivals, particularly Google and Facebook. As Google has come to dominate the search business and Facebook has ruled social networking, both have also become giants of digital advertising. Yahoo, meanwhile, has floundered—its stock has fallen, and the value of the company has dropped nearly $15 billion since April 2015. The company has also struggled to share a clear vision of what it does to the world.
The future of Yahoo is more complicated than what will happen to Tumblr or its e-mail service. Last year, Yahoo had its hopes pinned on spinning off its valuable stake in Chinese tech giant Alibaba, but ultimately decided against it after fearing a massive tax bill. Today, the company said that separating its core Internet business from its Alibaba stake is still a priority in 2016 but was vague on how exactly it planned to pull off the separation. Much of its stock value is tied to its stakes in Alibaba and Yahoo Japan, which has also led to pressure on Yahoo in recent months to spin off (or outright sell) its internet properties.
There seems to be significant tensions between what the future of Yahoo looks like to Mayer versus what it looks like to Yahoo's board. Maynard Webb, Yahoo's chairman of the board, says he is supportive of Mayer's plan to simplify the company's core businesses. At the same time, Webb seems willing to sell-off the very businesses that Mayer is seeking to improve. "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," he said in a statement.
As doubts about Yahoo's future have grown, several high-profile executives have left in recent months. And with layoffs now on the horizon, the company is also coming under fire for its performance review system, which has played a role in past employee layoffs. (The New York Times reported yesterday that a former Yahoo editor has sued the company, claiming that it used the performance review system as an excuse to fire people and meet the company's financial goals.)
For Mayer, this year will be a crucial one. She has been trying to right the Yahoo ship ever since she arrived as CEO in 2012, heralded as the savior who would, the company hoped, work the same magic that made her such a successful executive during her tenure at Google. Now she's left with the task of proving that the company can keep its costs low—all while trying to figure out its place in Silicon Valley (and the future). If she can't, Yahoo's future may not include Mayer at all.
