Portal giant Yahoo! aims to achieve cost savings of US$400m by the end of the year, and expects to cut its global workforce by at least 10pc, or some 1,400 people.
The company reported revenues of US$1.7bn, up 1pc on the previous year, and generated a net income of US$54m, down US$101m from the previous year.
“An increasingly challenging economic climate and softening advertising demand contributed to revenues this quarter coming in at the low end of our outlook range,” said Blake Jorgensen, chief financial officer, Yahoo!.
“While we are disappointed with our results, we’re pleased that we continue to benefit from the aggressive cost management efforts we have pursued during the year. These efforts helped our adjusted operating cash flow come in above the midpoint of our outlook range for the quarter, despite significant investments in our strategic objectives.
“We have the balance sheet strength, liquidity and free cash flow we need to continue to make progress on our core strategies as we address this slowdown,” Jorgensen said.
The company said its goal is to reduce its current annualised cost run rate of US$3.9bn by more than US$400m before the end of this year.
Because the majority of expenses are headcount-related, Yahoo! said it expects to reduce its global workforce by at least 10pc during the fourth quarter.
The company achieved US$1.5bn in marketing services revenues, up just 1pc on last year, while fees revenues were flat year-on-year at US$224m.
Revenues excluding traffic acquisition costs were US$1.3bn, up 3pc on last year.
“As economic conditions and online advertising softened in the third quarter, we remained highly focused on our 2008 strategy to invest in initiatives that enhance not only our long-term competitiveness, but also our ability to deliver for users and advertisers in this more difficult climate,” said Yahoo! co-founder and CEO, Jerry Yang.
“We have been disciplined about balancing investments with cost management all year, and have now set in motion initiatives to reduce costs and enhance productivity. The steps we are taking this quarter should deliver not only near-term benefits to operating cash flow, but should also substantially enhance the nimbleness and flexibility with which we compete over the long term.
“We enter this slowing market with competitive advantages as the destination of choice for consumers and a leader in providing online advertisers with the broadest set of advertising management tools and products in the industry. We plan to continue building on those strengths,” Yang said.
By John Kennedy