Tags: Yahoo | sales | revenue | advertising

Yahoo Revenue Misses Estimates as CEO's Turnaround Sputters

Tuesday, 21 April 2015 04:48 PM

Yahoo! Inc.’s first-quarter revenue fell short of analysts’ estimates, underlining Chief Executive Officer Marissa Mayer’s challenge in attracting advertisers even as the Web portal adds content and signs new partners.

Sales, excluding revenue shared with partner websites, fell 4 percent to $1.04 billion, missing analysts’ average prediction of $1.06 billion, according to data compiled by Bloomberg. Profit before some costs was 15 cents a share, the company said Tuesday in a statement, compared with projections for 18 cents.

Mayer, who took the helm in 2012, has been focusing on Yahoo’s mobile business, rolling out new online channels and striking exclusive content deals, yet she’s still struggling to add users and boost the company’s slice of Web-advertising budgets. As those dollars go instead to younger rivals such as Google Inc., Facebook Inc. and Twitter Inc., Yahoo’s sales have dwindled to levels first reached in 2005.

“It’s a troubled business,” Colin Gillis, an analyst at BGC Partners in New York, said in an interview on Bloomberg Television. “This company is not growing revenue. In fact, it continues to shrink.”

Shares of Yahoo slipped 1.5 percent in extended trading. The stock, which dropped less than 1 percent to $44.49 at the close in New York, has fallen 12 percent this year.

While sales declined, the company said revenue from its emerging businesses -- a set Yahoo calls Mavens, including mobile, video ads, native ads and its Tumblr blogging platform - - expanded during the quarter. Mavens sales rose 58 percent to $363 million from $230 million a year earlier. Mobile revenue climbed 61 percent to $234 million.

Alibaba Stake

Yahoo’s share of the U.S. online display ad market may slide to 3.5 percent in 2017 from 5.5 percent last year, according to EMarketer Inc. Quarterly revenue growth has come in at less than 4 percent or negative since the end of 2012.

While shares have almost tripled under Mayer’s leadership, much of that added value is tied to Yahoo’s stake in Alibaba Group Holding Ltd., the largest Chinese e-commerce company. In January, Mayer unveiled plans to spin off the shares in a tax- efficient manner, a process that’s slated for the fourth quarter.

Activist investor Starboard Value LP is pushing for more — it’s also seeking a spinoff of Yahoo’s Japanese investment. In March, Starboard said the Internet company could unlock $11.1 billion, or $11.70 a share, of stockholder value, in part with a tax-efficient spinoff of its stake in Yahoo Japan Corp.

For the first quarter, net income attributable to Yahoo was $21.2 million, down from $311.6 million a year earlier. That included items such as stock-based compensation expenses.

Search Agreement

Yahoo, based in Sunnyvale, California, last week said it revamped a search agreement with Microsoft Corp., giving the Web portal more flexibility. Under the revised agreement, which the companies first announced in 2009, Yahoo no longer will have to use Microsoft to serve all the ads or organic results on desktop searches.

Some analysts have speculated that the company could tap Google, the world’s largest Internet-advertising company, to handle a minority of its promotions for search ads. That could help bolster Yahoo’s reach, and its sales, from that business.

Yahoo also has boosted its own lineup of products. In February, it unveiled a suite of development tools for mobile applications that integrate advertising services with features it acquired with analytics startup Flurry Inc. The set of programs is designed to help outside app developers add marketing spots, including those that use search and video, along with native ads, or the promotions that are displayed among other content.

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Tuesday, 21 April 2015 04:48 PM
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