Yahoo's new CEO lays out strategy for smaller, more focused company

Thompson's plan suggests which divisions will likely be cut as the company reinvents itself

Yahoo plans to cut about 50 properties and refocus on its core business, CEO Scott Thompson said in an earnings call on Tuesday.

In Thompson's first earnings call that reflected a full quarter of his leadership, he outlined a six-point plan to shrink Yahoo down to a smaller, more profitable business. The call followed the company's report that it saw increased profits, but its total revenue grew by just 1 percent.

Thompson said he plans to halt initiatives "including platforms for outside publishers" and theoretical research.

Moving forward, Yahoo will focus on its "core media, connections and commerce businesses," Thompson said. He identified "news, finance, sports, entertainment, mail and a handful of others" as the properties that bring in the most revenue and will continue to take the front seat.

"Yahoo has been doing way too much for too long, and it was only doing a few things really well," Thompson said. He said the company needed to "get clear on our core business, dedicate some of our best people and the most resources there and put our customers first."

The company will also look to cut costs by improving its cloud infrastructure and other ways to make "each of our properties more scalable and nimble and flexible and therefore less costly and time-consuming to run," he said.

Thompson also said Yahoo will make "better use of [its] vast data" to provide personalized content, targeted ads, and useful analytics for its advertisers.

Thomson and Tim Morse, Yahoo's chief financial officer, said in the earnings call that the layoffs the company made earlier this month will save it US$375 million per year.

As the company narrows its focus, there will almost certainly be more layoffs.

"I don't take the decision to eliminate jobs lightly," Thompson said, "but we have way too many people for the amount of output for this business."

The executives also expressed disappointment with Yahoo's search partnership with Microsoft. Morse said that it "didn't make as much progress, frankly, as we wanted to or envisioned for first quarter and that is concerning."

Thompson said Yahoo will continue to dedicate itself to its work with Microsoft to ensure that the companies stay alive in the search market dominated by Google, but he also alluded to "revisiting the relationship."

Cameron Scott covers search, web services and privacy for The IDG News Service. Follow Cameron on Twitter at CScott_IDG.

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Cameron Scott

IDG News Service
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