Yahoo announces plan for job cuts as activist investors seek radical overhaul

The struggling internet company will eliminate 10 per cent of its workforce, focusing on European operations, its media business and its platforms technology group, Business Insider said.

Marissa Mayer, the chief executive of Yahoo, is under intense pressure to reverse the decline of the company after three years in charge. She has drafted in McKinsey & Co, the management consultant, to spearhead a big reorganisation, reports The Times.

A spokeswoman for Yahoo said: “It’s our policy to not comment on rumours or speculation.”

Yahoo said on Wednesday that it would announce “additional plans for a more focused Yahoo” in the next few weeks.

On Wednesday, Starboard Value, an activist investor, published an open letter to Ms Mayer, calling for “significant changes across all aspects of the business starting at the board level, and including executive leadership”.

Jeffrey Smith, of Starboard, said that investors had “lost all confidence” in the company’s management.

Last month, SpringOwl Asset Management, a New York hedge fund, demanded that Yahoo lay off 9,000 of its 10,700 staff. Eric Jackson, of SpringOwl, made a pitch to David Filo and Jerry Yang, the company’s founders, offering them a plan to “save their baby”.

He said: “I would think they would be more interested in a real turnaround plan like ours.”

In November last year, it emerged that senior Yahoo executives were complaining of confusion, mismanagement and acrimony at the top of the company. At a meeting of more than 120 Yahoo managers in October, some executives are understood to have heckled top Yahoo executives after being shown the results of an employee survey that indicated big drops in morale and trust in the leadership.

Ms Mayer is one of America’s richest self-made women, with a pay package estimated at $42 million last year. She was one of the first employees at Google and rose to its upper echelons before departing in 2012 for Yahoo.

Yahoo gained prominence in the late 1990s as a gateway to the internet for millions of people. However, it has struggled to keep up with an explosion of new internet services.

The company’s share price is almost entirely driven by its 15 per cent stake in Alibaba, the Chinese ecommerce company, which floated last year. Several big acquisitions have failed to boost the company’s fortunes.

At least two big investors in Yahoo are understood to be pushing for a sale of the company’s internet business.

Shares in Yahoo fell by $2.00, or 6.2 per cent, to close at $30.61 yesterday.