THE PARTY’S OVER
Yahoo sale looks imminent as results disappoint
Marissa Mayer may have whiffed on earnings at Yahoo for the last time.
The struggling Web portal’s 41-year-old boss delivered bottom-line results that missed analysts’ forecasts, even as the aging tech giant neared a possible sale to Verizon Communications.
In a live video webcast to investors late Monday, Mayer said Yahoo wouldn’t make any statements on the sale efforts, but said the company is “deep into the process” and “will update our shareholders as soon as is prudent.”
Insiders say an announcement could come as early as Tuesday as bankers vet a third and final round of bids that were due late Monday. While Verizon is seen as the frontrunner, Quicken Loans owner Dan Gilbert and buyout giant TPG were also still in the mix, sources said.
“I am proud of what this company has achieved over the past four years,” Mayer, who took the helm as chief executive at Yahoo just under four years ago, said in Monday’s webcast.
That’s despite a secondquarter loss of $440 million as revenue excluding traffic acquisition costs totaled $841 million, off 19 percent from a year ago.
For the second quarter, adjusted earnings came in at 9 cents a share, missing Wall Street’s estimate by a penny. Yahoo shares in after-hours trades were unchanged, at $37.95.
On top of continued losses, Yahoo said it has further written down Mayer’s $1.1 billion 2013 acquisition of Tumblr by $482 million, after writing it down by $230 million following the previous quarter in February.
While Tumblr’s user traffic has been healthy, particularly on mobile, Mayer admitted anemic ad rates have made revenues disappointing.
“Our supply, because it’s growing so quickly, is outpacing demand” from advertisers, Mayer said.
The $700 million-plus Tumblr writedown isn’t the only example of Mayer’s stumbling, say critics, who likewise have blasted her heavy investments in the search business, despite Google’s dominance in the niche.
As if pleading her case to keep her job, the former Google exec attempted to put a positive spin on her turnaround efforts, saying she “continue[s] to be optimistic and passionate about Yahoo” despite “a lot of distraction and uncertainty” for employees amid the sale process.
Mayer likewise tried to tamp down anxiety over reports that a sale of Yahoo could trigger a provision in its search contract with Mozilla resulting in a $1 billion payout to Mozilla.
“There is a mitigation in the contract that ultimately would reduce some of our exposure and liabilities,” Mayer said, declining to elaborate.
Some of Mayer’s moves have shown traction, including the “Mavens” division she created to group together mobile, video, native advertising and social. Second-quarter Mavens revenue climbed 26 percent, to $504 million.
Still, that’s well short of the 60 percent growth Mavens showed in the yearearlier quarter.