Yahoo to Cut About 1000 Jobs

Includes: AABA, T
by: Eric Savitz

Yahoo (YHOO) will reduce staff by about 1,000 people and take a first quarter charge for the layoffs of about $20 million to $25 million to reflect related costs. That is a smaller reduction than some reports had suggested, which is not likely to be well received by the Street.

The company made the announcement on its post-earnings conference call Tuesday afternoon.

Also on the call, the company said it expects to receive a one-time payment of $300 million to $400 million related to a restructuring of its relationship with AT&T (NYSE:T), which was announced this afternoon. The new relationship covers mobile and portal advertising, and will involve a revenue split between the two companies, although specific terms were not disclosed. A restructuring of the relationship which eliminates ongoing per-subscriber payments from AT&T Yahoo DSL subscribers was widely expected.

Also, Yahoo said it expects to take a non-cash gain in the first quarter of $450 million to $550 million reflecting equity gains to Alibaba from the IPO.

Yang also talked on the call about the need for increased investment in its core segments, in particular its advertising and start-page initiatives. “Increased investment is the only appropriate strategy at this time,” he said.

In after hours trading, Yahoo shares are down $2.20, or 10.6%, at $18.61, a new 52-week low.