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"This is a company that does—and always will—believe in advertising revenue. There's nothing wrong with ad revenue. It's supported many traditional media companies over the decades."
——Terry Semel
SEMEL LAYS OUT HIS STRATEGY
FOR YAHOO TURNAROUND
Former WB Co-Head Plans for More Ad Sales, 9% Fewer Jobs, 10 Million New Registered Users
On Thursday, Yahoo chief Terry Semel finally unveiled his strategy to turn the company around.

The announcement, which involves a 9% workforce reduction, the pledge to add 10 million new registered users and description of new revenue sources, marks a sort of coming out party for Semel, former co-head of Warner Bros. with now-Dodger boss Bob Daly.

According to the Los Angeles Times, Semel emphasized that ad income will continue to be Yahoo's most important source of revenue over the next three years. "This is a company that does—and always will—believe in advertising revenue," he said. "There's nothing wrong with ad revenue. It's supported many traditional media companies over the decades."

At the close of Nasdaq trading Friday, Yahoo shares were up 64 cents (+4.32%) to $15.47.

As part of the transition, Yahoo will be eliminating 400 jobs, about 12% of Yahoo's total work force, while hiring 100 employees in key positions. Yahoo math experts tell us that 400 100 = 300 = 9%, or something like that.

The cuts will come from a combination of streamlining business units, discontinuing custom Internet broadcast services for business customers and reducing the number of employees focusing on international markets—currently one-third of the entire company.

Yahoo is also aiming to bolster other sources of revenue by charging fees for services that have traditionally been offered for free, such as online photo storage and personal ads, according to the Times.

For the strategy to work, Yahoo will have to turn more of its 217million users into registered users, who are prime targets for advertising and fee-based services. Currently, the company counts 80 million registered users, who account for 80% of total network usage. Semel said he expects to boost the number of registered users by at least 10 million "in a reasonable period of time."

Semel also hinted at more deals like the one struck Wednesday with telecommunications giant SBC Communications to provide a co-branded high-speed Internet service, the Times reports. Yahoo expects to convert most of SBC's 3.6 million Internet service customers to the new service, which would net Yahoo a portion of subscriber fees in exchange for giving SBC a cut of advertising and other revenue, Semel said. Partnering with other telecom and broadband companies could bring Yahoo several million more registered users, according to the Times.

A year ago, Yahoo relied on advertising for 90% of its revenue, with service and transaction fees accounting for only 10%. This year, service and transaction fees amount to 24% of revenue, compared with 76% for advertising. During the next three years, the split could move closer to 50-50, Semel said.

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