Ya­hoo quar­terly profit slides but rev­enue up

The China Post - - WORLD BUSINESS - BY SO­PHIE ESTI­ENNE

Ya­hoo re­ported Tues­day a 93-per­cent slide in quar­terly profit from a year ago, while rev­enues rose modestly in dis­ap­point­ing quar­terly re­sults for the strug­gling In­ter­net pi­o­neer.

Net profit for the first quar­ter tum­bled to US$21.1 mil­lion (NT$655.18 mil­lion) from US$312 mil­lion in the same pe­riod last year, amid what chief ex­ec­u­tive Marissa Mayer called “en­cour­ag­ing rev­enue growth” of 8 per­cent.

To­tal rev­enue for the first three months of the year grew to US$1.23 bil­lion, led by gains in “search rev­enue,” from ads linked to queries us­ing Ya­hoo’s search func­tion.

But rev­enue and profit were both lower than Wall Street fore­casts.

“Ya­hoo is amidst a multi-year trans­for­ma­tion to re­turn an iconic com­pany to great­ness,” Mayer said in the earn­ings state­ment.

“This quar­ter, we saw en­cour­ag­ing rev­enue growth of 8 per­cent, with dis­play rev­enue grow­ing a mod­est 2 per­cent and search grow­ing 20 per­cent.”

She said mo­bile rev­enues reached US$234 mil­lion in the quar­ter, up 61 per­cent from a year ago.

The In­ter­net gi­ant will now fo­cus on “ac­cel­er­at­ing” rev­enue growth “while man­ag­ing our mar­gins and costs,” Mayer said.

She dis­closed that Ya­hoo cut some 1,100 jobs in the past quar­ter, bring­ing the num­ber of re­duc­tions to some 3,000 over the past three years.

Share­holder Pres­sure

Ya­hoo has been un­der pres­sure from ac­tivist share­hold­ers to de­liver more value with lower costs and a nar­rower fo­cus.

In the past quar­ter, ex­penses were sharply higher, due to in­creased prod­uct devel­op­ment spend­ing, traf­fic ac­qui­si­tion costs and re­struc­tur­ing ex­penses.

But Mayer noted dur­ing the com­pany’s earn­ings call that “we are hard at work at mon­e­tiz­ing our prod­ucts to drive rev­enue.”

The Cal­i­for­nia group, which re­cently cel­e­brated its 20th an­niver­sary, has been un­der­go­ing a ma­jor re­or­ga­ni­za­tion since Mayer took the helm in 2012.

The ef­forts have in­cluded di­vest­ment of a large part of its stake in on­line gi­ant Alibaba, along with a se­ries of ac­qui­si­tions.

Mayer spent more than US$1 bil­lion to ac­quire the blog­ging plat­form Tum­blr to reach a younger mar­ket seg­ment, and has made a push to fo­cus more on mo­bile con­tent and search.

Mayer said the com­pany was look­ing at a way to “max­i­mize value” of its stake in Ya­hoo Ja­pan, be­lieved to be worth sev­eral bil­lion U.S. dol­lars.

But she said any change would come af­ter “care­ful study.”

In the past quar­ter, its search vol­ume reached a five-year high, helped by a part­ner­ship with Mozilla, which made Ya­hoo the browser’s de­fault search en­gine.

The Mozilla agree­ment “is not only a high qual­ity deal for us — it is a prof­itable deal for us,” Mayer said, adding that Ya­hoo “sur­passed all ex­pec­ta­tions for new users and re­ten­tion.”

But Ya­hoo re­mains far be­hind search mar­ket leader Google, based on mar­ket sur­veys.

Ya­hoo and Mi­crosoft last week up­dated their search part­ner­ship to al­low more flex­i­bil­ity in searches and end Ya­hoo’s ex­clu­sive sales force role with ad­ver­tis­ers.

AP

In this Jan. 7, 2014 file photo, Ya­hoo Pres­i­dent and CEO Marissa Mayer speaks dur­ing the In­ter­na­tional Con­sumer Elec­tron­ics Show in Las Ve­gas.

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