Yahoo is to cut about 1,500 jobs - 10% of its global workforce - as it tries to restore the company's fortunes in the face of declining profits.
The US internet group made the announcement as it reported a 64% slump in third quarter profits.
Yahoo's net profit for the three months to 30 September totalled $US54.3 million, compared with $US151.3 million for the same period last year.
The company turned down a takeover offer from Microsoft earlier this year.
Revenues rose 1% from a year earlier to $1.79 billion - worse than market expectations.
Yahoo has spent much of this year fighting to keep its independence. In January, Microsoft offered to buy the company for $US47.5 billion, but Yahoo rejected this, saying it undervalued the company.