Yahoo turns to wireless as Internet biz languishes: Firm plans to cut 7% of workforce

Yahoo Inc. is looking to mobile to help offset its struggling online business.
The Internet giant said it will slash 1,000 jobs — marking a 7% overall reduction in its workforce — in the wake of a fourth quarter that saw profits plunge nearly 24%. Yahoo also issued a disappointing 2008 guidance, prompting both Citigroup and Oppenheimer to downgrade the company’s stock.
“This is a pivotal time for Yahoo’s business,” said CEO Jerry Yang, “and we have a unique window of opportunity right now to make the necessary, game-changing investments that will help us capture a significant piece of the growing ad market and create substantial long-term value for our shareholders. While we will continue to face headwinds this year, we believe that the moves we are making will help us exit 2008 stronger and more competitive and return to higher levels of operating cash flow growth in 2009.”
Shares of Yahoo fell more than 8% to $19.02 following the report.
But Yahoo also issued a joint statement with AT&T Inc. outlining an expansion of its business with the largest U.S. phone company. Under terms of the new deal — which replaces a 7-year-old relationship — Yahoo will provide search and display ads for customers of AT&T’s Internet and mobile services.
The agreement “calls for revenue sharing,” the companies said without disclosing details.
The AT&T deal mirrors similar arrangements with Vodafone and the Canadian telecommunications firm Rogers. And the news comes on the heels of Yahoo’s strategic partnership with T-Mobile that delivers display ads on the European carrier’s Web’n’Walk service, which is powered by Google Inc. — Yahoo’s nemesis.