Yahoo announced Tuesday an "aggressive-strategic plan" to narrow the company's focus on what it considers stronger businesses to fuel growth, drive revenue and increase efficiency. The areas include search, mail, social, video, mobile and several verticals in select geographic locations.
The plan means driving revenue growth through mobile, video, native and social to $1.8 billion in revenue this year.
It also includes reducing its workforce by roughly 15% and exiting five offices in Dubai, Mexico City, Buenos Aires, Madrid, and Milan, subject to local laws and consultation processes.
Marissa Mayer, CEO of Yahoo, stated the new strategy "will enable us to accelerate Yahoo's transformation," adding it called for "bold shifts in products and in resources." It also means Yahoo will simplify its product portfolio, keeping the products that distinguish the company competitively and drive the most users, revenue and market opportunity.
The company also appealed to investors by promising to improve profitability to reach an adjusted EBITDA run rate of approximately $1 billion by the second half of 2016, reduce operating expenses by more than $400 million by the end this year, and limit GAAP revenue impact of product and regional exits to approximately $100 million.
In the new strategic blueprint, the consumer products division will include search, email, and Tumblr and four verticals: News, Sports, Finance, and Lifestyle. Growth markets include the U.S., Canada, U.K., Germany, Hong Kong, and Taiwan.
For advertisers, Yahoo will have two core offerings: Gemini and BrightRoll. Gemini combines search and native ads for superior results, while BrightRoll offers programmatic buying and selling tools for video, display and native advertising.
Mobile search is the biggest opportunity, per the company, so it will shift most of its resources in that direction, positioning Yahoo to redefine platforms to support mobile devices.
Investments in Yahoo Mail will improve speed and stability, as well as add features that make it easier for users to share, search and connect through the platform. As an essential driver of the company's entire product portfolio, focused investment in Yahoo Mail will help accelerate growth across the business.
For the Tumblr platform and Yahoo's digital content strongholds of News, Sports, Finance, and Lifestyle, investment will focus on growing user engagement, especially on mobile.
Yahoo also promised to explore non-strategic asset divestitures that, if consummated, could generate in excess of $1 billion in cash and deliver increased value to shareholders, advertisers and the more than 1 billion people who use Yahoo's products and services.
Maynard Webb, Yahoo's chairman of the board, noted that exploring "strategic alternatives" was in "the best interest of our shareholders. Separating our Alibaba stake from our operating business continues to be a primary focus, and our most direct path to value maximization."
It's expected that most of these changes will take place in Q1, but by the end of 2016, the company should have 9,000 employees and fewer than 1,000 contractors. "This represents a workforce that is roughly 42% smaller than it was in 2012 and will result in savings in short term operating expense of $400 million annually," per the company.