Yahoo: Struggling Internet Giant

Yahoo is yet to see a surge in its revenue as it continues to struggle under the leadership of CEO Marissa Mayer who has taken over three years ago. This has intensified apprehensions that the profitability of the internet company has reached to very low levels, which people see as the point of no return.

Last Tuesday, April 21, 2015 emerged the most recent proof that the once esteemed Yahoo has lost its magical touch in the industry. Reports of its earnings during the first three months have returned as a disappointment. Ken Goldman, the chief financial officer of Yahoo, as well as Mayer, eased investor’s frustrations by promising to cut down costs, while stipulating that the company is more than willing to comply with Wall Street’s desire for a spinoff of its stake in Yahoo Japan.

YahooAccording to its executives, Yahoo stated on Tuesday that it already has undergone preparations to downscale its workforce by at least 1,100 people during the first three months of the year to 11,400 full-time employees.

Activist shareholder Starboard Value L.P., which owns a nearly 1 percent stake in Yahoo, has been urging Mayer to slash expenses and spin off the Yahoo Japan stake to lift the company’s stock.

Investors have steered the stock of the company down to 12 percent this year prior to the earnings report came out a couple of days ago. The shares initially fell by an additional 2 percent, however showed signs of recovery after the cost-cutting pledge as well as the remarks from Yahoo Japan. If, however, it is proven a spin off, there are chances that it will repeat what Mayer has recently started to do with an even more important stake in the Alibaba Group, which Is one of the upcoming e-commerce start that came from China.

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Upon including the ad commissions, the revenue of Yahoo plunged to 4 percent from the same time last year. This assisted in the troubling trend started way before Mayer took over in July 2012. The net revenue of the internet giant also saw a decline compared to previous years in seven of the past nine quarters. The only positive improvement really was a 1 percent increase in revenue.

S&P Capital IQ analyst Scott Kessler said that, “There are some good things going on at Yahoo, but it still feels like there’s a lot more still to be done,”

Despite the fact that Yahoo’s stock has tripled in value since Mayer stepped in as its leader, most of the increase has been associated to the 24 percent stake in Alibaba Group and 35 percent stake in Yahoo Japan.

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