Yahoo Inc said it would cut 5 per cent of its global workforce (nearly 700 jobs) and reported quarterly results that showed progress towards controlling costs, sending shares higher in an after-hours relief rally.
The Internet company said economic conditions remained challenging, as revenue on Yahoo Websites from both display ads and search ads fell during the first quarter.
But the decline in revenue was offset by better cost controls, 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 1,600 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.
The company also announced in an internal memo to employees on Tuesday that it planned to implement a mandatory shutdown of operations during the holiday week of December 25, 2009 through January 1, 2010.
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 54 cents at $14.92 in after-hours trading on Tuesday. The company's stock is up roughly 9 per cent from its Monday close of $13.66.
Yahoo's financial report comes as speculation has mounted that the firm has restarted discussions with software giant Microsoft Corp about an Internet search partnership, following last year's failed merger negotiations.
Bartz, who replaced Yahoo co-founder Jerry Yang in the top job in January, declined to comment on anything related to Microsoft during the conference call on Tuesday.
But she reiterated her belief that search is a very valuable part of Yahoo's business.
"I'm well-versed enough in the search business at Yahoo to say it's absolutely critical to Yahoo," Bartz said in response to a question regarding whether she is now familiar enough with the business to respond to an offer for search.
In the first full quarter under Bartz's leadership, Yahoo generated revenue of $1.58 billion, down 13 per cent from the year-ago period. Exclud
ing 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.
While revenues were "a bit light," Jefferies & Co analyst Youssef Squali said in an email that Yahoo's overall results, particularly on the bottom line, were not bad given the environment.
Yahoo said that revenue from display ads on its owned and operated websites slid 13 per cent year-over-year in the first quarter, with revenue from automotive advertisers down "substantially" and spending by retail advertisers "softened" compared to the year ago period.
Revenue from search-based ads on Yahoo sites were down 3 per cent. And Yahoo said that advertisers were spending less money to bid for the individual keywords that their ads appear alongside, echoing a theme present in results last week from Google Inc, the No.1 US Internet search company.
Yahoo, like Google, stressed the importance of keeping costs in line amid the difficult economy. The new round of job cuts come about two months after Bartz announced a reorganization of Yahoo's internal management structure.
The layoffs, said Bartz, are a "natural outgrowth" of the reorganization, which will allow Yahoo to streamline its operations and eliminate duplication of efforts.
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," said Jefferies analyst Squali. "We think there is potential outperformance on margins."
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.
Agencies
Showing posts with label more. Show all posts
Showing posts with label more. Show all posts
Saturday, April 25, 2009
Wednesday, January 14, 2009
Is Motorola planning more layoffs?
Motorola Inc is expected to make steep cost cuts, including more layoffs, at its mobile devices division as a broad slump in demand for cell phones exacerbates its own market share declines.
With even market leader Nokia warning about weakening phone demand, analysts say Motorola could miss Wall Street's already low expectations for phone sales in the fourth quarter and the current quarter. As a result, they expect Motorola to cut the size of its handset unit -- beyond the 3,000 layoffs the company announced in October, which were mostly in its handset unit and equivalent to 4.5 per cent of its workforce.
"Resizing is necessary beyond the 3,000," said Avian Securities analyst Matthew Thornton, who estimated that Motorola's phone unit could have roughly 28,000 employees after the previously announced layoffs.
Motorola declined to comment. The Schaumburg, Illinois-based company fell to fourth place in the global phone market in the third quarter of 2008, and said key new devices would be ready in the second half of 2009, which could mean deeper market share losses until then.
This was before Nokia said in December that it expected the phone market to shrink 5 per cent or more in 2009. Some analysts now expect sales to fall as much as 15 per cent from 2008. As a result of the deteriorating market, Deutsche Bank analyst Brian Modoff estimated that Motorola needed to cut costs by roughly another $650 million, on top of the $800 million reductions already announced.
"Their cost structure is too high for where they need to be in this environment given their market share," said Modoff, who sees Motorola reporting 22 million phone sales for the fourth quarter just ended, and 17 million for this quarter. He estimated that with its current cost structure Motorola could break even if it sold about 28 million phones per quarter, but said that this figure was too high for comfort in the weak economy.
"I think they need to be profitable below 20 million units," said Modoff. Analysts on average expect Nokia to report 121.5 million phone sales for the fourth quarter, with estimates ranging from 110 million to 135 million.
They expect Sony Ericsson, which overtook Motorola in the third quarter, to sell about 26.6 million phones. Phonescoop.com, a blog about the latest phones, said Motorola could lay off as many as 50 per cent of its mobile phone workers, but analysts said this would be a "drastic" move.
Charter Equity Research analyst Ed Snyder said such a cut would mean giving up workers in research and development, and "dramatically" reducing the number of phones launched. But he said that such a move was not implausible.
"They're hemorrhaging cash. They have to cut the division," he said. But Deutsche Bank's Modoff said Motorola needs to be careful about where it makes cuts because it needs to be able to compete with popular devices such as Apple Inc's iPhone and phones based on Android, the operating system designed by Google Inc.
These phones have made the focus of industry competition more about innovative software and user interfaces than about phone hardware."They should keep (jobs) in software and chop them in hardware. The emphasis needs to be placed on low cost designs and operating systems," said Modoff. In the third quarter, Motorola's mobile unit revenue fell 31 per cent to $3.1 billion, and the unit's operating loss widened to $840 million from $248 million.
Agencies
With even market leader Nokia warning about weakening phone demand, analysts say Motorola could miss Wall Street's already low expectations for phone sales in the fourth quarter and the current quarter. As a result, they expect Motorola to cut the size of its handset unit -- beyond the 3,000 layoffs the company announced in October, which were mostly in its handset unit and equivalent to 4.5 per cent of its workforce.
"Resizing is necessary beyond the 3,000," said Avian Securities analyst Matthew Thornton, who estimated that Motorola's phone unit could have roughly 28,000 employees after the previously announced layoffs.
Motorola declined to comment. The Schaumburg, Illinois-based company fell to fourth place in the global phone market in the third quarter of 2008, and said key new devices would be ready in the second half of 2009, which could mean deeper market share losses until then.
This was before Nokia said in December that it expected the phone market to shrink 5 per cent or more in 2009. Some analysts now expect sales to fall as much as 15 per cent from 2008. As a result of the deteriorating market, Deutsche Bank analyst Brian Modoff estimated that Motorola needed to cut costs by roughly another $650 million, on top of the $800 million reductions already announced.
"Their cost structure is too high for where they need to be in this environment given their market share," said Modoff, who sees Motorola reporting 22 million phone sales for the fourth quarter just ended, and 17 million for this quarter. He estimated that with its current cost structure Motorola could break even if it sold about 28 million phones per quarter, but said that this figure was too high for comfort in the weak economy.
"I think they need to be profitable below 20 million units," said Modoff. Analysts on average expect Nokia to report 121.5 million phone sales for the fourth quarter, with estimates ranging from 110 million to 135 million.
They expect Sony Ericsson, which overtook Motorola in the third quarter, to sell about 26.6 million phones. Phonescoop.com, a blog about the latest phones, said Motorola could lay off as many as 50 per cent of its mobile phone workers, but analysts said this would be a "drastic" move.
Charter Equity Research analyst Ed Snyder said such a cut would mean giving up workers in research and development, and "dramatically" reducing the number of phones launched. But he said that such a move was not implausible.
"They're hemorrhaging cash. They have to cut the division," he said. But Deutsche Bank's Modoff said Motorola needs to be careful about where it makes cuts because it needs to be able to compete with popular devices such as Apple Inc's iPhone and phones based on Android, the operating system designed by Google Inc.
These phones have made the focus of industry competition more about innovative software and user interfaces than about phone hardware."They should keep (jobs) in software and chop them in hardware. The emphasis needs to be placed on low cost designs and operating systems," said Modoff. In the third quarter, Motorola's mobile unit revenue fell 31 per cent to $3.1 billion, and the unit's operating loss widened to $840 million from $248 million.
Agencies
Saturday, December 6, 2008
Do Internet users want more languages?
Which is the one language that the people of India aspire to learn? Which is the one language that most Indians use while communicating on the Internet?
The answer is English. But you obviously knew that.
At the Internet Governance Forum being held in Hyderabad, Ajit Balakrishnan, CEO of Rediff.com, said that there is no evidence from the last ten years of the Internet business that users want Indian languages. Rediff has email in 11 languages, and 99% of the users prefer to use email in English, says a report.
Balakrishnan believes that a majority of Indians use the Internet for non- or little language skill associated activities like sending send messages, download music, view pictures or videos. These activities hardly require text input/usage.
Interesting comment from the Rediff CEO so is he trying to say that the investment he made to make those 11 languages available for its users was futile?
Not really; in fact, it could be called future-ready. In the coming years when Internet penetrates into large sections of rural India, that's when the regional languages will come handy, perhaps?
Source: Techtree
The answer is English. But you obviously knew that.
At the Internet Governance Forum being held in Hyderabad, Ajit Balakrishnan, CEO of Rediff.com, said that there is no evidence from the last ten years of the Internet business that users want Indian languages. Rediff has email in 11 languages, and 99% of the users prefer to use email in English, says a report.
Balakrishnan believes that a majority of Indians use the Internet for non- or little language skill associated activities like sending send messages, download music, view pictures or videos. These activities hardly require text input/usage.
Interesting comment from the Rediff CEO so is he trying to say that the investment he made to make those 11 languages available for its users was futile?
Not really; in fact, it could be called future-ready. In the coming years when Internet penetrates into large sections of rural India, that's when the regional languages will come handy, perhaps?
Source: Techtree
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