The net income fell to $117.6 million from $536.8 million in the comparative period a year earlier. The internet icon attributed the dip in income to the erosion in its online advertising revenue.
It may be recalled that in the year 2008, Yahoo's quarterly earnings were boosted by a gigantic $401 million gain from the successful initial public offering by Alibaba, a Chinese e-commerce company. If this effect is negated, Yahoo's first-quarter profit this year has declined 16 percent only.
The Web portal also confirmed that it would lay-off approximately 5 percent, or close to 700 of its employees. The layoffs, to be carried out in the next couple of weeks, would be the third round of layoffs in just over a year. Yahoo laid off 1,000 workers in January 2008 and another 1,500 in October last year.
This time around, the axe will fall on the product managers and engineers. Having replaced co-founder Jerry Yang and barely three months into the job, the new chief executive officer, Carol Bartz said, “We sort of had one product management person for every three engineers, so we had a lot of people running around and telling engineers what to do."
An apparently infuriated Bartz was not her normal self when she used some flowery language. She said of the engineers, "But nobody was f- doing anything." But immediately after this faux pas, she apologized, "Excuse me, I knew that would slip out one of these times.”
Although Yahoo has been doing a decent job in steadying its market share in the U.S., a great deal of its revenue comes from the costly graphical advertising which, too, has been adversely affected due to the ongoing recession. Display ad revenues for Yahoo fell 13 percent from a year ago.
"Yahoo is not immune to the ongoing economic downturn," claimed Bartz. She added, "The economy clearly remains a challenge for us."
Yahoo’s cost cutting efforts bore fruit though. The company’s operating expenses fell to $779 million. The figure represents 49 percent of the revenue, down from 52 percent a year ago. Overall, Yahoo’s results matched analysts' expectations.
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