Yahoo to cut 400 jobs as it rearms for growth

SUNNYVALE, Calif. -- Yahoo! Inc. will cut 400 jobs, or 13 percent of its work force, as it reorganizes itself in search of "sustainable, profitable growth," the Internet company told analysts Thursday.

It is the second round of layoffs at Yahoo this year. In April, the company cut 420 jobs, 12 percent of its work force.

The company is condensing 44 business units into six to help reduce its reliance on advertising and to generate new paid services, said Yahoo's chairman and CEO, Terry Semel.

"There's nothing wrong with advertising revenue," Semel said from a stage in Yahoo's new gray-and-purple headquarters. "We believe in it. But you will see this is going to be a much more diversified company."

Advertising amounted to 90 percent of Yahoo's $1.1 billion in revenue last year, which proved problematic in the dot-com bust and the economic slowdown. Yahoo has reported four straight money-losing quarters.

Although 400 employees will be cut from Yahoo's 3,100-member work force, about 100 employees will be added in new positions created by the restructuring, for a net loss of around 300.

Yahoo shares were down 10 cents to $15.11 in early afternoon trading on the Nasdaq Stock Market.

Semel, a Hollywood veteran hired in April to transform Yahoo, said Yahoo hopes to reduce advertising to 76 percent of its revenue by the end of this year and 50 percent by 2004.

To do that, the company will offer more services to consumers and businesses, make its search engine more profitable, and seek more fees from shopping, auctions and Internet access services around the world.

Yahoo moved toward some of those goals this week by announcing a partnership with Overture Inc. to offer paid listings on its search pages and a deal with SBC Communications Inc. to provide co-branded high-speed Internet access over digital subscriber lines.

Yahoo counts 218 million registered users -- 80 million of whom are considered active users. Semel wants at least 10 million of them to have some form of a "direct billing relationship" with Yahoo.