Yahoo today announced plans to axe 15 per cent of its workforce, roughly 1,600 jobs, as part of an "aggressive strategic plan" to help transform the company.
The job cuts will reduce its employees to about 9,000 by the end of 2016.
The announcement of the cuts came as Yahoo reported a $4.3bn (£3bn) loss for the year.
"Today, we're announcing a strategic plan that we strongly believe will enable us to accelerate Yahoo's transformation," Marissa Mayer, chief executive of Yahoo, said.
"This is a strong plan calling for bold shifts in products and in resources."
Shares have dropped by 2.62 per cent in after hours trading following the announcement.
Earlier today the WSJ reported that Yahoo would announce its exploring "strategic alternatives" for its struggling internet business.
Speaking at the UBS Global Media conference in December, Verizon's chief financial officer, Fran Shammo, said: "It's just like with AOL, I mean we look at everything across this spectrum. And if we see there is a strategic fit, and it makes sense for our shareholders and we can return value.
"I mean we'll look at it, but at this point it's way too premature to talk about this one."
Last year, Verizon snapped up internet business AOL for $4.4bn (£2.8bn).