Yahoo chief executive Marissa Mayer said the business was exploring a "strategic plan", which includes axing 1700 jobs and possibly packaging up some parts of the business for a sale.
The company reported a $4.4bn loss for the last three months of 2015, and wrote down the value of one of Mayer's star acquisitions, Tumblr, by $230m.
The writedown is a direct admission that gambling $1.1bn on the blogging and social-networking site in 2013 has not paid off. By Yahoo's own metrics, Tumblr finally hit 1bn users last year, although some commentators suggest this figure is not accurate.
In 2014, Mayer predicted that Tumblr would make $100m in revenue for 2015, a goal the platform has missed.
That suggests brands and media agencies have yet to be convinced by Tumblr, although Yahoo has signed up the odd major name, such as Clinique, for campaigns.
Mayer told analysts: "In 2015, we experienced a slower ramp in monetisation than we initially expected, and coupled with the sales realignment, the business didn’t deliver that $100m revenue goal for the year."
Yahoo will shutter its digital magazines, Yahoo Games and Smart TV.
The company will also reduce its presence in Europe, closing the Milan and Madrid offices, as well as those in Dubai, Mexico City and Buenos Aires. This will sharpen the firm's focus on North America, the UK, Germany, Hong Kong and Taiwan.
Yahoo will continue the reverse spin-off of its $31bn stake in Chinese ecommerce site Alibaba, separating this from its core internet business.
Maynard Webb, Yahoo's chairman, said: "Separating our Alibaba stake from our operating business continues to be a primary focus, and our most direct path to value maximisation."