Yahoo Will Reduce Work Force By 12 Percent

SANTA CLARA, Calif. — Yahoo! Inc. reported a steep drop in first-quarter revenue and announced plans to reduce its work force by 12%, discontinue some services on its Web sites and lower marketing and promotional expenses.

The company will also outsource and consolidate some operations.

“We made some decisions that were difficult, but which ultimately balance the investment in our growth areas with the adjustments to our near-term business plan,” Tim Koogle, chairman and chief executive, said in a prepared statement.

For the first quarter, Yahoo reported a net loss of $11.5 million, or two cents a share, compared with net income of $67.6 million, or 11 cents a share, a year earlier. Revenue fell 22% to $180.2 million from $230.8 million a year earlier.

Excluding acqusition-related expenses and charges as well as expenses related to employee stock options, the company said it would have posted earnings of $7.6 million, or one cent a share, compared with $60.5 million, or 10 cents a share, a year earlier. The mean estimate of analysts surveyed by Thomson Financial/First Call was for Yahoo to break even from operations.

Facing a decline in the online-advertising market, the company first lowered its guidance for the first quarter and the full year in January, and then again in March.

This is the first unprofitable quarter in four years for Yahoo and the first year-over-year decline in revenue in its seven-year history.

In 4 p.m. EDT trading on the Nasdaq Stock Market, Yahoo (YHOO) fell 16 cents, or 1%, to $15.86.

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