Yahoo to cut its workforce by 15%
The job cuts will reduce the number of its employees to about 9,000 by the end of 2016.
The announcement came as Yahoo reported a $4.3bn (£3bn) loss for the year.
In a statement, chief executive Marissa Mayer said: "This is a strong plan calling for bold shifts in products and in resources."
She added that it would "dramatically brighten our future and improve our competitiveness, and attractiveness to users, advertisers, and partners."
The head-count reduction is the latest part of Ms Mayer's attempt to turn around the troubled internet company, which is struggling to compete against the likes of Facebook and Google.
Cost-cutting
In December, the company announced it was reversing a plan to sell its stake in the Chinese e-commerce site Alibaba, and would instead look to spin off its core internet business.
Ms Mayer was forced to change course on the Alibaba sale following pressure from several activist investors.
The focus on cutting costs and raising profits is being seen as the latest sign that the company is becoming more serious about selling its core internet business.
If Yahoo does sell its main internet business the process is unlike to be a quick one.
"They can slim down to improve profitability, but they are in an industry that is growing and they're not," said Martin Pyykkonen, managing director at Rosenblatt Securities.
"If the core business was really a valuable asset someone would have come and tried to buy it already," he added.
Under pressure
The four point plan presented includes more focus on the user experience for its search engine, e-mail and Tumblr blogging site; monetising these areas to make them more appealing to advertisers, especially on mobile; slimming down its product lines and cutting its workforce.
The company said: "As a result of this four-point plan, Yahoo is expected to return to modest and accelerating growth in 2017 and 2018."
Yahoo has estimated the cutting back of its product line alone could generate $1bn.
Ms Mayer has been under pressure from investors to step down as chief executive.
"We would like to see a higher stock price, and we think Marissa and her current management team have become a hindrance to that," said Eric Jackson, managing director of SpringOwl.
Yahoo's shares fell 1.4% in after-hours trading.
Source: BBC News