Yahoo will offload 5% of its workforce after quarterly profit slumped 78%.
It earned $118 million on 13% lower sales of $1.58 billion. Adjusted for currency fluctuations, revenue would have declined 8%, Yahoo said.
The sale of price comparison service Kelkoo and lower fee revenue from broadband partnerships, VoIP services and subscription music offerings also contributed to the decline, Yahoo said.
About 680 of Yahoo\'s around 13,600 workers will be made redundant, with most employees being informed within the next two weeks, Yahoo said. Last year, Yahoo cut around 2,400 jobs.
The company has projected income of just $80-90 million for Q2, on revenue of $1.42-$1.62 billion.
Yahoo CEO Carol Bartz said the company experienced pressure on both display and search advertising in Q1. "Yahoo! is not immune to the ongoing economic downturn, but careful cost management in Q1 allowed our operating cash flow to come in near the high end of our outlook range," she said.
Cash flow nevertheless fell 67% during the quarter, slumping to $262 million.