Yahoo Quarterly Earnings a Mixed Bag

Marissa Mayer - H 2015
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Marissa Mayer - H 2015

Per-share adjusted earnings were better than expected, though the company was short on revenue and offered mildly weak guidance.

Yahoo on Tuesday reported mixed earnings in the second quarter of 18 cents per share, after certain items, on $1.24 billion revenue.

Analysts expected the company to earn 18 cents per share after items on $1.03 billion in revenue. Revenue rose 15 percent over the same quarter a year ago, though Yahoo posted a net loss of $22 million in the quarter compared with net earnings of $270 million last year.

Wall Street seemed initially ambivalent about the report, with shares falling 1 percent in the after-hours session, then quickly reversing to a 1 percent gain before falling again to about even. During the regular session, the stock was up fractionally to $39.72.

The company said it expects $1.04 billion in sales in the current quarter, about $30 million shy of what analysts were modeling.

CEO Marissa Mayer has been orchestrating a turnaround at Yahoo, and several numbers posted Tuesday suggests that she is gaining a bit of traction. Search revenue was up 22 percent to $521 million as paid clicks increased 13 percent, for example. Plus, the online firm sold 9 percent more display ads than it did a year ago, fueling a 15 percent rise in display revenue to $500 million.

The turnaround also includes cutting staff, and Yahoo said on Tuesday it employs fewer than 11,000 people, about 1,000 fewer full-time employees than when Mayer was named CEO in 2012. 

"Yahoo's transformation continues to make great progress," Mayer said on Tuesday.

During a video-conference call with analysts, Mayer showed off how easy it is to use Yahoo to search for movies on a mobile device, and she boasted that 1.3 million people have played daily fantasy sports since Yahoo launched the service two weeks ago. She also touted Yahoo's plan to stream an NFL game between the Buffalo Bills and Jacksonville Jaguars. 

Mayer called online video one of the fastest-growing areas of advertising, and video ad revenue for Yahoo grew 60 percent year-over-year.

The Internet company said last week that it intends to spin off its $32 billion of Alibaba shares into a separate company called Aabaco, and CFO Ken Goldman addressed the plan during the video presentation on Tuesday. He called it a "key milestone" for Yahoo and the "highest priority" for the company, though he acknowledged "much work lies ahead" before the spinoff can be accomplished tax-free in the fourth quarter as planned.