Phoenix.com announces massive layoffs; established portals are transforming

[[147697]]

Following the massive layoffs at Sina and Sohu this year, Phoenix.com CEO Liu Shuang sent an internal email yesterday, announcing that there will be large-scale layoffs due to pressure on Phoenix.com’s stock price.

Transformation in five areas

"You should have noticed that our stock has been undervalued recently, completely deviating from its true value and being oversold," the internal letter said at the beginning. Phoenix New Media's IPO price on the New York Stock Exchange in 2011 was $11, but by August 31, the stock price had fallen to $4.79.

Liu Shuang said that Phoenix.com will save human resources and invest them in the more important mobile Internet battlefield. Phoenix.com's transformation is mainly reflected in five aspects: First, it will resolutely not make a mobile APP in the vertical field of simple information browsing; second, there are currently a large number of editors who cannot be reused by mobile clients, so the scale must be strictly controlled and reuse on both sides must be encouraged with all efforts; third, the team that needs to consume a lot of manpower costs to support offline activities must also be strictly streamlined; fourth, PC content products that do not contribute much to traffic, influence, and monetization, and do not have distinct differentiated characteristics, can be decisively abandoned; fifth, we must take stock of various business lines, streamline the organization as much as possible, and try to avoid bloated personnel and redundant personnel. In other words, this layoff involves at least employees in the editing, marketing, and offline marketing operations departments.

Regarding the downsizing of Phoenix.com, Liu Shuang bluntly pointed out that Phoenix.com is full of redundant staff, bloated structure, overlapping positions, and the work intensity is far different from that of many startups, so there is a lot of room for internal streamlining. Liu Shuang promised that a large part of the labor costs saved by streamlining personnel and institutions will be fed back to relevant departments, especially when adjusting wages at the end of the year, which will be tilted towards front-line employees.

Rumor has it that layoffs will reach 40%

Currently, Phoenix.com has more than 2,000 employees. Liu Shuang's internal letter did not disclose the scale of layoffs and compensation plans. It is reported that the scale of layoffs may reach 40%, and the compensation plan may be the "N+3" plan commonly used by Internet companies. Phoenix.com did not respond to this yesterday. An Phoenix employee told reporters that since last Friday, many channel employees have received leave notices.

An internal employee of Phoenix.com said that he and his colleagues were considering whether to apply for resignation, mainly due to pessimism about the transformation of traditional portal websites. Regarding the "overstaffing" mentioned in the internal letter, the employee said that Phoenix.com's salary and benefits are acceptable, with a salary increase of about 30% each year. Compared with other portals, Phoenix.com's overtime pay is also higher, for example, the early shift subsidy is 150 yuan/day. In this case, overtime pay fraud often occurs, "The company strictly implements the triple salary and double salary system for holidays, but the review of overtime applications is very lax."

Portal websites are transforming

Judging from the financial performance, traditional old portals are undergoing a difficult transformation.

Phoenix New Media's total revenue in the second quarter of this year was RMB 422.9 million, a year-on-year increase of 2.9%, of which mobile advertising revenue increased by 124.2% year-on-year; the net profit attributable to Phoenix New Media's listed company in the second quarter was RMB 22.5 million, a year-on-year decrease of 73.4%.

Sina's net revenue in the second quarter was $213.6 million, up 14% from the same period last year. It is worth noting that its net revenue growth was due to the year-on-year increase in online advertising revenue in the second quarter, which was due to the growth of Weibo advertising and marketing revenue; portal advertising revenue decreased by $7.9 million year-on-year.

Sohu suffered a net loss of 28 million US dollars in the second quarter. Due to the high investment cost of video websites and the slump in the game business, Sohu has not been able to get rid of the shadow of losses in the past two years.

While traditional portals are experiencing sluggish performance, there has been a trend towards personalized and precise reading in the mobile Internet era. This trend has been discovered by established portals, which have sought to transform themselves.

As early as February this year, Phoenix.com announced that it would increase its investment in the personalized news client product "Yi Dian Zixun". After the transaction is completed, it will own about 46.9% of "Yi Dian Zixun" and become the largest shareholder of the latter. This can be said to be a sign of the deepening of Phoenix.com's strategic transformation this year. "Yi Dian Zixun" is an information reading APP based on user interests.

Previously, Sina's Weibo invested in "Toutiao", and Sohu's client and H5 pages added long-tail content and interest recommendations. After Sohu News client launched a running channel this year, Zhang Chaoyang frequently appeared in various running occasions to endorse his own products. Sohu's Sogou Search APP also launched the "WeChat Headlines" function.

Background

Sina and Sohu also had large-scale layoffs

As early as 2013, Sina.com carried out a large-scale layoff, with a reduction of 10%; and at that time, Sina.com divided its internal channels into three categories: business channels (automobiles, real estate, sports, etc.), comprehensive channels (finance, technology, etc.), and news centers. After the division, content editors who were not in the sales staff would also be responsible for sales targets.

Earlier this year, Zhang Chaoyang, Chairman and CEO of Sohu, revealed that Sohu would optimize the company's personnel structure in 2015. As of February this year, Sohu's staff had been reduced by about 2,000 people compared to the third quarter of 2014. Among them, Sohu Changyou optimized about 1,000 people. These 2,000 laid-off employees accounted for about 13% of Sohu's total number of employees.