The troubled website Yahoo has hired the management and consulting firm McKinsey & Co. to assist with the reorganization of its core businesses. While Yahoo desperately needs some help, the move is somewhat questionable for the cash-strapped website.
Consultants like McKinsey typically charge at least $1 million per month, and with the mess at Yahoo as large as it is, the company will undoubtedly be shelling out millions of dollars for McKinsey’s services.
McKinsey will assist Yahoo in deciding which units to close, sell and invest in. Yahoo is currently planning to sell its 15% stake in Chinese e-commerce company Alibaba.
Both Yahoo and McKinsey have declined to comment on the situation. Yahoo has been struggling to increase its advertising sales revenue because of very intense competition from big players Google and Facebook.
Yahoo and its CEO Marissa Mayer have been trying to revive the company’s core media and online advertising business. The company has been spending more money to get users on the website. However, they have seen very little progress.
The revenue for Yahoo fell to $1 billion in the third quarter of the year after the company deducted fees paid to partner websites. Meanwhile, the earnings forecast for the current quarter has fallen below $1 billion. The expected revenue for the fourth quarter is just $920 million to $960 million.
Fearful that the company’s top executives might take their services elsewhere, Mayer has asked key people within the company to make three to five commitments, promising to stay at Yahoo.
Meanwhile, several big names such as Yahoo Media Chief Kathy Savitt and Chief Development Officer Jackie Reses have already exited in the past few months. Yahoo insiders expect that at least two more workers who report directly to Mayer will also leave the company in the near future.
Stock for Yahoo has fallen about 32% on the year.
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