Yahoo Inc. is planning to cut at least 10 percent of its workforce, Business Insider reported Thursday, citing sources. The layoffs are likely to take place in the first quarter and expected to be implemented companywide, the report added.
The sources told Business Insider that the move will mostly impact Yahoo’s media business, its European operations and its platforms technology group. Although the company did not comment on the cuts, it acknowledged that the change was imminent, the report added.
The report comes after activist investor Starboard Value LP said Wednesday that Yahoo should make changes to its management, board and business strategy. The Sunnyvale, California-based company had a difficult 2015, with its stocks ending the year down 34 percent. In order to pacify investors, Yahoo had planned to spin off its 15 percent stake in Chinese e-commerce giant Alibaba. However, it reportedly abandoned the plan, citing uncertainty over the tax hit as the main reason.
According to Quartz, the 10 percent workforce layoff is not a major change and the move indicated that the company paid attention to the demands of another activist investor, Eric Jackson of SpringOwl Asset Management. Jackson had proposed replacing CEO Marissa Mayer and cutting 75 percent of the company's staff. Moreover, Starboard CEO Jeffrey Smith said Wednesday that Yahoo should look out for leadership change, though he did not name Mayer openly.
Yahoo is also likely to find itself in a legal battle after a Chicago federal judge ordered the company Monday to face a class action lawsuit accusing it of sending unsolicited text messages to Sprint Corp. cellphone users in violation of the Telephone Consumer Protection Act. Over 500,000 users could likely to be part of the class.