Preceding a restructuring plan likely to include layoffs, Yahoo struck a deal with SBC Communications Inc. to jointly offer high-speed Internet access over SBC's phone lines using Yahoo's Web service.
The Wall Street Journal reports that Yahoo is expected to lay off around 400 employees, or between 10% and 15% of its work force, according to people familiar with the matter.
A Yahoo spokeswoman declined to comment on a specific number. Yahoo executives had said in recent months that they were reviewing the company's 44 business units for possible cutbacks. The move to team up with SBC is part of a growing push by Yahoo to reduce its dependency on advertising revenue.
Yahoo, Sunnyvale, Calif., and SBC Communications, San Antonio, said they will pair SBC's digital-subscriber line, or DSL, service with a souped-up version of Yahoo that incorporates video conferencing, multiplayer games and a variety of other features designed to exploit fast Internet connections. The companies will also create a version of the service for slower dial-up Internet users. SBC will promote the Internet services through its sales force and customer-service teams in the regional telephone company's 13-state area.
Yahoo will receive an undisclosed portion of the subscriber fees from the Internet service, and SBC will receive a share of advertising, e-commerce revenue and other fees collected by Yahoo.
The companies didn't say how much the joint DSL service, due out in the middle of next year, would cost. SBC will encourage its existing 3.6 million Internet subscribers, including 1.2 million DSL subscribers, to upgrade to the Yahoo-SBC service.