The company posted net revenue totalling $US180.2 million, compared to $US230.8 million for the first quarter last year, citing a marked drop-off in online advertising as the cause of the company's lackluster results. First quarter net revenue was down 22 per cent year-on-year. Pro forma net income came in at $US7.6 million, and diluted net income per share totalled $US0.01, with $US0.04 in cash earnings per share.
Last year pro forma net income was $US60.5 million, or $US0.10 per diluted share for the first quarter.
To help manage expenses, Yahoo also announced that it will reduce its workforce of 3510 employees by approximately 12 per cent within 30 days. The company declined to specify which areas of its business would suffer the job cuts, however, because that the affected employees had not yet been notified.
Last year, the Internet search, communications and commerce giant relied on advertising for 90 per cent of its revenue.
In a conference call with press and analysts Wednesday evening, Yahoo top executives said that the company is adopting a new strategy given the current economic slump, whereby it will focus on potentially high-growth areas while reducing its cost base. In terms of reducing fixed costs, Yahoo chief financial officer Susan Decker said that the job cuts are expected to save the company anywhere from $US7 million to $US9 million a quarter.
These changes will spell higher profits toward the end of the year, Decker said, although the company is foreseeing higher expenses next quarter due to compensation hikes, rising energy costs and new facilities. The CFO maintains that the second quarter will be the only quarter where Yahoo will post a loss in EBITDA (earnings before interest, taxes, depreciation and amortization) , however.
In the second quarter, the company is expecting $165 million to $185 million in pro forma revenue, and earnings per share to break even.