Yahoo disappoints, to cut jobs

CEO Jerry Yang says company faces 'headwinds' this year. Struggling search engine plans 1,000 job cuts in February. Stock sinks on weak 2008 sales guidance.

Subscribe to Technology
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all CNNMoney.com RSS FEEDS (close)
By Michal Lev-Ram, Fortune reporter

jerry_yang.ap.03.jpg
Yahoo CEO Jerry Yang is faced with the unenviable task of trying to catch Google in online search.

NEW YORK (CNNMoney.com) -- Search engine Yahoo announced it would lay off 1,000 employees by mid-February, even as it reported fourth quarter earnings Tuesday that beat expectations.

During the company's conference call with analysts, chief executive Jerry Yang warned that the company faces "headwinds" this year and confirmed the upcoming layoffs, which had been rumored for the past week.

Yang said the company would make the job cuts as part of a "workforce realignment." The company has 14,300 total employees.

The stock plunged more than 10% after-hours on the news.

Yahoo's sales came in at $1.8 billion, up 8% from a year ago. Excluding advertising sales that Yahoo shares with its partners, the company reported revenue of $1.4 billion, roughly in line with Wall Street's expectations of $1.41 billion, according to estimates from Thomson First Call.

The company reported net income of $206 million, or 15 cents per share. While that was down 23% from a year ago, profits did beat analysts' forecasts for 11 cents per share.

For the full year, Yahoo's revenue, excluding ad sales it shares with partners, came in at $5.11 billion, up 12% from a year ago. Total sales rose 8% to $7 billion. Full-year net profit was $751 million, a 12% decrease from 2006.

But Yahoo also said it expects 2008 annual revenue, excluding sales shared with partners, of anywhere from $5.35 billion to $5.95 billion. Wall Street had been expecting sales of $5.9 billion before the report.

"While we will continue to face headwinds this year, we believe that the moves we are making will help us exit 2008 stronger and more competitive and return to higher levels of operating cash flow growth in 2009," Yang said in a written statement.

Yahoo is the number-two search engine in the world. But it lags arch rival Google by a wide margin. Google (GOOG, Fortune 500) reports its own fourth-quarter results Thursday. Yahoo also faces competition from social networking sites like Facebook and News Corp (NWS, Fortune 500).-owned MySpace. The company's own attempt at a social network, called 360, flopped.

Yang, who replaced Terry Semel as CEO last June, promised investors a 100-day review of the company shortly after taking over. Some analysts have said that investors are growing impatient with Yahoo as it continues to lose ground to Google and others. To top of page

Photo Galleries
These 10 food trends could dominate 2015 So long, kale. Here's what's expected to shake up the food industry next year. More
Beyond Russia: Geopolitical hot spots in 2015 Investors beware: These 5 global crises are likely to rattle the stock market and world economy. More
These 20 antique guns could fetch big bucks Morphy Auctions in Pennsylvania is putting nearly 1,000 old guns on the block. Here are just a few. More

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.