Yahoo is to lay off at least 1,500 employees as part of a cost savings plan after releasing poor third quarter results.
This is the second time in nine months that Yahoo has resorted to staff cuts to reduce costs as share prices have fallen to five-year lows.
The internet firm’s third quarter net income dropped to £33.1m, or 2p a share, from £92.2m, or 7p, a year ago, Yahoo said in a statement.
Yahoo chief executive Jerry Yang said in a memo that the company has been through a tremendously challenging year.
He said managing the "increasingly turbulent global advertising climate" has been an important focus for the last three months.
The latest round of staff cuts are part of a plan to save more than £244m a year and confirmed speculation ahead of the earnings announcement.
Yang said the company would be targeting non-headcount expenses wherever possible, such as facilities and outside services.
"However, because compensation expenses are the single largest part of our costs, we anticipate a reduction of at least 10% of our global workforce by year-end," he said.
Affected employees are to be notified of layoffs in the next several weeks.
Yang said the company was moving ahead with "a clear focus on accomplishing what is necessary to set the organization up for long term success".
Yahoo shares fell 48p to £7.36 in regular trading yesterday, but gained 7.3% in after hours trading.
US market commentators have said that Yang’s rejection of Microsoft’s takeover offer of £20 in May is now looking like a "horrible mistake".