Yahoo is to cut 2000 jobs, 14% of its workforce, as part of a restructuring plan to try to cut costs and keep up with its rivals.
The California-based company has 700 million users, but has failed to keep up with Google in the search engine business, while its webmail service has been overtaken by social media such as Facebook and Twitter.
Yahoo expects the cost-cutting programme to save $US375 million per year.
However, severance pay is expected to cost the company a one-off $US125 -$US145 million.
It is the company's sixth round of redundancies in the last four years, with the latest announcement bringing the total to almost 6000 jobs.
The BBC reports Yahoo has also changed its chief executive twice over in the same period, but has as yet failed to turn around its fortunes.
The company made a profit of $US1 billion last year, down from $US1.2 billion in 2010. Revenues fell to $US5 billion from $US6.3 billion.
