Yahoo opens door to deal, unveils big job cuts

Yahoo on Tuesday said it is cutting 15 per cent of its workforce and narrowing its focus as it explores "strategic alternatives" for the future of the faded Internet star. 

PHOTO: REUTERS

FEB 3, 20166:42 AM

[SAN FRANCISCO] Yahoo on Tuesday said it is cutting 15 per cent of its workforce and narrowing its focus as it explores "strategic alternatives" for the future of the faded Internet star.

The announcement, coming with the release of a big quarterly loss, offered the first sign that Yahoo may be open to a sale or merger after years of struggling to regain its former glory.

The California company reported a loss of US$4.43 billion in the final three months of last year, due mostly to lowering the value of its US, Canada, Europe, Latin America and Tumblr units.

Revenue was up marginally from a year ago at US$1.27 billion.

See who is talking about YAHOO!

Last 30 days:

• 17334
• 385
• 1059

30 days avg

HOT COMPANIES

Sainsbury +371% messages

• BP +340%
• GlaxoSmithKline +189%
• EasyJet +178%
• Sky plc +118%
• BHP Billiton +102%
• Marks & Spencer +37%
• Smith & Nephew +22%
• BT Group +17%
• Old Mutual +17%

• BP +340%
• GlaxoSmithKline +189%
• EasyJet +178%
• Sky plc +118%
• BHP Billiton +102%
• Marks & Spencer +37%
• Smith & Nephew +22%
• BT Group +17%
• Old Mutual +17%

Yahoo said in a statement it was launching "an aggressive strategic plan to simplify the company, narrowing its focus on areas of strength to better fuel growth." At the same time, it said it was looking at "additional strategic alternatives," suggesting it could seek a deal to sell or merge the company.

Yahoo chief executive Marissa Mayer said she is launching "a strong plan calling for bold shifts in products and in resources" to help revive the company's fortunes.

She maintained that the plan would "dramatically brighten our future and improve our competitiveness, and attractiveness to users, advertisers, and partners."

The plan is intended to drive growth in Yahoo's mobile, video, social and "native" offerings for advertising, a group of products which Mayer refers to as "Mavens."

Yahoo said it will reduce operating expenses by more than US$400 million by the end of the year.

Cuts at the company will include cutting its workforce by about 15 per cent, or approximately 1,500 people, and closing offices in Dubai, Mexico City, Buenos Aires, Madrid and Milan.

Most of the cuts were expected top take place this quarter.

Yahoo expects that by the end of this year it will have approximately 9,000 employees and fewer than 1,000 contractors.

That figure is less than half the number of workers that were on Yahoo's payroll in 2012, according to the company.

"Yahoo does not take this decision lightly and will make every effort to handle the process with thoughtfulness, transparency, and compassion," it said in a release.

Yahoo shares were down slightly more than one per cent to US$28.60 in trades that followed the close of market on Tuesday.

Maynard Webb, Yahoo chairman, said that the board is "committed to the turnaround efforts of the management team" but must also look at other options.

"The board also believes that exploring additional strategic alternatives, in parallel to the execution of the management plan, is in the best interest of our shareholders," Mr Webb said, adding that Yahoo would "engage on qualified strategic proposals."

The restructuring plan will allow Yahoo to focus on mail, search and the Tumblr blogging platform for consumers, as well as "deep vertical utilities" identified as news, sports, finance and lifestyle. Yahoo will also focus on two advertising units known as Gemini and BrightRoll.

Yahoo is also expect to sell off non-strategic assets including real estate, generating some US$1 billion.

The company plans to proceed with its plan to separate the core business from its stake in Chinese online giant Alibaba.

Last year, Yahoo revised the plan for tax reasons, deciding to spin off the core operations in a move that could open it up to a sale or other strategic deal.

AFP

    
 

Oil extends deep losses, WTI falls below US$30

[NEW YORK] Oil prices extended sharp losses for a second day on Tuesday as traders anticipate another rise in US crude stockpiles, worsening the global glut. 

PHOTO: AFP

FEB 3, 20166:52 AM

[NEW YORK] Oil prices extended sharp losses for a second day on Tuesday as traders anticipate another rise in US crude stockpiles, worsening the global glut.

US benchmark West Texas Intermediate for delivery in March slid US$1.74 (5.5 per cent) to US$29.88 a barrel on the New York Mercantile Exchange. It was the first time WTI closed below US$30 since January 21.

In London, Brent North Sea crude for April fell to US$32.72 a barrel, down US$1.52 (4.4 per cent) from Monday's settlement.

"Indications are pointing to a fairly chunky build tomorrow," said Matt Smith of Clipper Data, referring to the Department of Energy's weekly petroleum report scheduled on Wednesday.

While traders expected more bearish news on US crude inventories, the prospects of some sort of coordinated action between Russia and the Organisation of the Petroleum Exporting Countries to cut output faded.

"Last week, several Opec and Russian officials hinted at the possibility of coordinated production cuts, which assisted in lifting crude prices above US$34 a barrel," said Robbie Fraser of Schneider Electric.

"However, this week's trading has seen crude futures move decidedly lower, as there is growing realization that a Russia/Opec effort to lift prices still faces significant obstacles."

Russia announced on Tuesday that it pumped a post-Soviet record amount of crude oil and condensate in January of about 18.9 million barrels a day, as it fights to hold onto market share.

Adding pressure on the market was the dim outlook for global oil demand.

"Weak economic data from China and the US have put pressure on prices. Consequently, the manufacturing sector in the two most important oil-consumer countries is in a recession, which is stirring up fears about future oil demand," Commerzbank said in a client note.

AFP

    
 

Europe: Shares drop as oil prices fall, BP reports loss

PHOTO: REUTERS

FEB 3, 20167:26 AM

[LONDON] European equities fell sharply on Tuesday as crude oil prices slipped again and companies like BP reported disappointing earnings.

BP fell 8.7 per cent, its biggest daily decline since mid-June 2010, after reporting its worst annual loss in more than 20 years in 2015 and announced thousands of job cuts. It maintained its dividend, but the weak results and outlook are likely to put pressure on the company, which has had to increase borrowing.

"BP's dividend is a mile away from being covered by earnings and the market is saying that this is unsustainable," said Steve Clayton, head of equities research at Hargreaves Lansdown." They are a chasm away from their cash break-even oil price of around US$60 per barrel."

The pan-European FTSEurofirst index dropped 2 per cent, after closing 0.2 per cent weaker on Monday. The index is down 8.5 per cent so far this year.

See who is talking about BP

Last 30 days:

• 979
• 20
• 196

30 days avg

HOT COMPANIES

Sainsbury +371% messages

• BP +340%
• GlaxoSmithKline +189%
• EasyJet +178%
• Sky plc +118%
• BHP Billiton +102%
• Marks & Spencer +37%
• Smith & Nephew +22%
• BT Group +17%
• Old Mutual +17%

• BP +340%
• GlaxoSmithKline +189%
• EasyJet +178%
• Sky plc +118%
• BHP Billiton +102%
• Marks & Spencer +37%
• Smith & Nephew +22%
• BT Group +17%
• Old Mutual +17%

The STOXX Europe 600 Oil and Gas index dropped 4.8 per cent as Brent oil fell more than 5 per cent, hit by worries about demand and rising supply. Hopes for a deal between Opec and Russia to cut output faded.

Shares in Reposol, Royal Dutch Shell, Eni and Total all fell between 4 and 5 per cent.

BHP Billiton fell 6.7 per cent after Standard & Poor's cut its credit rating and warned it might be lowered further if measures to shore up cash levels were not taken. BHP is now expected to cut its dividend by half.

Swiss bank UBS also slumped, falling 6.8 per cent, after reporting a surprise outflow of funds from its flagship wealth management business. That overshadowed its best results since 2010 and a higher-than-expected dividend.

Infineon fell 5.7 per cent after disappointing guidance on margins. Ferrari tumbled 9.6 per cent after making a cautious forecast for its financial performance this year.

Shares in Danske Bank rose 4 per cent after the company reported fourth-quarter pretax profit that beat forecasts, thanks to higher trading income. The Danish bank also plans to buy back shares.

Sainsbury's rose 2.4 per cent after saying it had agreed to buy Argos-owner Home Retail for 1.3 billion pounds (S$2.67 billion) to expand its online business. Sainsbury's said it expected the offer to improve earnings per share in the first full year following completion.

Syngenta climbed 3.7 per cent on reports saying China's state-owned ChemChina was nearing a deal to buy the Swiss seeds and pesticides maker.

REUTERS

   
 

US: Stocks drop as oil tumbles; Nasdaq -2.2%

PHOTO: AFP

FEB 3, 20166:49 AM

[NEW YORK] US stocks fell sharply on Tuesday, tumbling with European equities as another drop in oil prices underscored worries about global growth.

The Dow Jones Industrial Average lost 295.64 points (1.80 per cent) to 16,153.54.

The broad-based S&P 500 fell 36.35 (1.87 per cent) to 1,903.03, while the tech-rich Nasdaq Composite Index shed 103.42 (2.24 per cent) to 4,516.95.

Oil prices extended sharp losses for a second day, with the US benchmark closing under US$30 a barrel for the first time since January 21.

"It's all about oil today, there's no question about that," said Peter Cardillo, chief market economist at First Standard Financial.

"It's a question of strength and weakness, and so weaker oil prices just means weaker economic activity."

Google parent Alphabet was a rare winner, gaining 1.7 per cent to overtake Apple as the world's most valuable company after reporting a five percent rise in fourth-quarter earnings to US$4.92 billion.

Falling oil took its toll. ExxonMobil fell 2.2 per cent after reporting its weakest quarterly profits since 2002 and US shares of BP sank 8.5 per cent after reporting a US$6.5 billion loss for 2015.

Standard & Poors also downgraded the credit ratings of 10 oil companies and announced reviews of another 10. Two of the downgraded companies, Chevron and Marathon Oil, fell 4.8 per cent and 10.3 per cent, respectively.

Investors sold off banking sector stocks, with Goldman Sachs losing 5.0 per cent, Bank of America 5.2 per cent and Citigroup 4.9 per cent.

Mattel surged 13.8 per cent after reporting fourth-quarter net income of US$215.2 million, up 10.8 per cent from the year-ago level and better than expected. Worldwide sales of its iconic "Barbie" doll rose one per cent.

Royal Caribbean Cruises sank 15.2 per cent after it projected 2016 earnings of US$5.90-US$6.10 per share, below the US$6.27 expected by analysts. Rival firm Carnival fell 7.9 per cent.

Dow Chemical jumped 5.8 per cent after reporting better-than-expected earnings and announcing that chief executive Andrew Liveris would leave the company after it merges with DuPont.

AFP