Yahoo! Inc. will cut 400 jobs, 13 percent of its work force, as it reorganizes itself in search of "sustainable, profitable growth," the Internet company told analysts Thursday.

The company is condensing 44 business units into six to help reduce its reliance on advertising and to generate new paid services, said Yahoo's chairman and CEO, Terry Semel.

"There's nothing wrong with advertising revenue," Semel said while standing on a stage in Yahoo's new gray-and-purple headquarters complex. "We believe in it. But you will see this is going to be a much more diversified company."

Yahoo shares were down 10 cents to $15.11 in early afternoon trading on the Nasdaq Stock Market.