Yahoo is laying off about 1,700 employees in a shake-up likely to determine whether chief executive Marissa Mayer can save her own job.
The long-anticipated purge will jettison about 15 per cent of Yahoo's workforce along with an assortment of services Ms Mayer decided are not worth the time and money that the Internet company has been putting into them.
The cost-cutting is designed to save about $400 million annually to help offset a steep decline in net revenue this year.
Ms Mayer also hopes to sell some of Yahoo's patents, real estate and other holdings for up to $3 billion.
Products to be dumped include Yahoo Games, Yahoo TV and some of the digital magazines that Ms Mayer started as chief executive.
She will also close offices in Dubai, Mexico City, Buenos Aires, Madrid and Milan.
In an apparent concession to frustrated shareholders, Ms Mayer also said Yahoo's board will consider "strategic alternatives" that could result in the sale of all the company's Internet operations.
Analysts have speculated that Verizon, AT&T and Comcast might be interested in buying Yahoo's main business, despite years of deterioration.
Ms Mayer expressed confidence that her plan to run Yahoo as a smaller, more focused company "will dramatically brighten our future and improve our competitiveness, and attractiveness to users, advertisers, and partners".
But some of Yahoo's most outspoken shareholders, such as SpringOwl Asset Management, have already concluded that Ms Mayer should be laid off, too.
Ms Mayer, a former rising star at Google who helped that company eclipse Yahoo, defended her performance.
"Yahoo is a far stronger, more modern company that it was three-and-half years ago," she said.
Even after the mass firings are completed by the end of March, Yahoo will still have about 9,000 workers - three times the roughly 3,000 people that SpringOwl believes the company should be employing, based on its steadily declining revenue.
"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, SpringOwl's managing director.
Yahoo's revenue has been shrinking through most of Ms Mayer's reign, even though she has spent more than 3 billion dollars buying more than 40 companies, while bringing in new talent and developing mobile applications and other services designed to attract more traffic and advertisers.
The decline has persisted while advertisers have been steadily increasing their digital marketing efforts. Most of that money has been flowing to Google and Facebook - two companies once far smaller than the now 20-year-old Yahoo.