Yahoo revenue drops as ad business flounders
The company has to work faster to make up for the drop, CEO Marissa Mayer says
IDG News Service - Yahoo reported falling sales and mixed results in its crucial advertising business on Tuesday, signaling further challenges ahead in CEO Marissa Mayer's efforts to turn around the aging company.
Total sales for the second quarter ended June 30 were US$1.08 billion, down 4 percent from the $1.14 billion reported during the same quarter last year, Yahoo said.
Excluding traffic acquisition costs, revenue was $1.04 billion, down 3 percent from the 2013 quarter and below the consensus forecast of $1.08 billion from analysts polled by the Thomson Financial Network.
Yahoo's profit was $270 million, a 19 percent drop from the $331 million reported a year earlier. Net earnings per diluted share were $0.26, down 15 percent.
On a non-GAAP basis, which excludes certain expenses, earnings per share were $0.37, slightly below analysts' expectations of $0.38.
In after-hours trading on Tuesday, shares were trading at $35.60, down from a high of $35.95 on Monday.
"Our top priority is revenue growth and by that measure, we are not satisfied with our Q2 results," Mayer said in a press release. "While several areas showed growth, their growth was offset by declines," she said.
Search advertising revenue, which rose by 2 percent to $428 million, lent a little shine to an otherwise lackluster set of results.
But there weren't many other bright spots. Display ad revenue dropped by 8 percent to $436 million, "highlighting the fact that we need to work faster to ameliorate the negative trends," Mayer said.
And while the number of display ads sold rose by 24 percent compared with a year earlier, the price per ad fell by the same percentage.
The quarterly results were announced around the two-year anniversary of Mayer's appointment as CEO. Since 2012, she has tried to turn Yahoo around, partly by redesigning legacy products, making bets in digital video and acquiring startups for engineering talent.
Still, she has yet to produce strong growth in Yahoo's core advertising business to help the company better compete against Google and Facebook.
Alibaba, the Chinese e-commerce giant, has helped to bolster Yahoo's stock by virtue of Yahoo's 24 percent stake in the company. Alibaba is expected to go public soon, and when it does Yahoo will be required to sell some of its shares, which should bring in a lot of cash.
But on Tuesday, Yahoo said it had entered into a share repurchase agreement with Alibaba that reduces the number of shares it has to unload at the time of the IPO. Instead of 208 million shares, it will only have to sell 140 million. That could mean less of a windfall for shareholders.
- Workload Change: The 70 Percent of Your Business DevOps Forgot Adding WLA early in the development process ensures that the benefits of DevOps accrue for all applications, including your batch services. This paper...
- Oracle EBS and RAC Performance & Elasticity on Vblock™ Systems VCE Vblock™ Systems provide simple, low-risk solutions for migrating from a physical to virtual environment.
- Backup and Recovery of Oracle EBS on VCE Vblock™ Systems This solution architecture describes the key features and benefits of backup and recovery in the virtualized Oracle EBS on Vblock Systems with EMC...
- Zero Downtime Migration for Oracle EBS R12 with RAC on Vblock™ Systems The validation testing of a typical customer configuration outlined in this white paper, utilizes a virtualized Oracle EBS environment. The results illustrate that...
- Building Tomorrow's Data Center with Converged Technologies A number of forces are converging: the cloud, converged infrastructure, big data and fabric architectures to name a few.
- Responding to New SSL Cybersecurity Threat The featured Gartner research examines current strategies to address new SSL cybersecurity threats and vulnerabilities. All Data Center White Papers | Webcasts
Our new bimonthly Internet of Things newsletter helps you keep pace with the rapidly evolving technologies, trends and developments related to the IoT. Subscribe now and stay up to date!