Yahoo estimates that its planned withdrawal from South Korea, the first country exit under new CEO Marissa Meyer, will cost it $94 million.
Details of the financial implications of the move, which Yahoo previously revealed will result in 200 job losses, were disclosed in a regulatory filing which foresees cash outlays of $5 million on severance pay expense and $2 million on lease termination charges. Non-cash charges — categorized as “goodwill and other asset impairments” — make up the remaining $87 million.
Yahoo says that the costs will be felt in the current quarter of business, which ends on December 31 2012, that’s the same timeline that it is working to for completion of the exit.
“This decision is part of our efforts to streamline operations and focus our resources on building a stronger global business that’s set up for long-term growth and success,” read the company’s announcement from October 19.
Yahoo did not disclose any further details of exactly why the closure is happening but, interestingly, the statement explained that “growing challenges” had made its work in the country “very difficult”.
Google is one firm that regulators have kept a close eye on in the country, while previous restrictions — such as real-name requirements for visitors and a block on uploading content to YouTube — have recently been lifted, easing the known issues for Web content firms there.
Web ranking firm Alexa has Yahoo’s news and search portal as the ninth most visited website in Korea, lagging rivals Naver — Korea’s top search engine — and Google, among others.
Elsewhere in Asia, Yahoo sold up its share in Chinese e-commerce giant Alibaba in September for $7.6 billion, and it has been long expected to exit the Yahoo Japan joint venture that it owns with operator Softbank.
It isn’t all about exits and Meyer’s stewardship has seen Yahoo buy up mobile recommendations app Stamped, while it recently agreed a content deal with Rolling Stone-publisher Wenner and a fresh SmartTV tie-in with Samsung.
Here’s the full text of the 8K filing:
Costs Associated with Exit or Disposal Activities.
On October 24, 2012, the Company filed a Form 8-K to disclose that it had begun notifying employees whose employment would be terminated as a result of the Company’s plan to close its Korean business by December 31, 2012. At that time, the Company was unable to estimate the pre-tax cash and non-cash charges and total charges it expected to incur in connection with this action.
The Company now expects that it will incur pre-tax cash charges of approximately $5 million related to severance pay expenses and approximately $2 million related to lease termination charges. The Company also expects to recognize pre-tax non-cash charges related to goodwill and other asset impairments totaling approximately $87 million. The Company expects to recognize the majority of the total pre-tax charges in the quarter ending December 31, 2012. The Company is unable at this time to estimate the other contract termination charges, the amount of total cash charges or the total charges it will incur.
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