Yahoo!'s European staff have been given a deadline to turn around parts of the business that have been performing badly.
Toby Coppel, the head of Yahoo!'s European operations, told the FT that some of the firm's regional properties may be sold off if there is no improvement in their figures by Q1 2008.
Services coming under scrutiny include shopping comparison site Kelkoo, the paper added.
While Yahoo! has a 14% share of the search market worldwide, it holds just 3% of the market in Europe, according to comScore. Also, just 42% of the European web population view its sites.
Coppel, who took over the European leadership role in April. said it aimed to fix this problem by providing more relevant content for European users, though it won't be producing more local content or adding more staff.
"If you make the content more relevant, people will come. If you make a great product, they will come."
Yahoo! CEO Jerry Yang also recently warned that some of the company's investments may be sold or shut down.