National Post (National Edition)
Yahoo’s earnings dip 7.9% in Q4
Bread-and-butter display ad revenue falls 3%
Yahoo Inc. posted quarterly results Monday reflecting a slight uptick in revenue following the hiring of CEO Marissa Mayer, instilling some fresh confidence in the embattled Internet firm.
However, a decline in Yahoo’s core business of selling online display advertisements took some of the shine off of the fourth-quarter numbers.
Yahoo said display-ad revenue fell 3% in the quarter compared with the same period a year earlier, to US $591million. The dip follows slight increases in display revenue reported for each of the prior two quarters.
In July, Ms. Mayer, a former executive at Yahoo rival Google Inc., was named Yahoo’s fifth acting CEO in a year amid ongoing turnover in its top ranks. She has signalled that her take on Yahoo’s ongoing turnaround bid will involve a strong focus on mobile services and forming key partnerships.
That has proven generally encouraging for investors, who had bid Yahoo’s shares up nearly 21% in the three months prior to the close of trading Tuesday.
After fourth-quarter and annual results were issued during late trading, Yahoo shares rose about 4.5% to US$21.21, but closed down US6¢ to US$20.31.
In a prepared statement, Ms. Mayer cited the first annual revenue growth in four years for Yahoo in 2012, as well as “tremendous internal transformation in the culture, energy and execution of the company.”
Given Yahoo’s difficult situation in recent years, analysts seemed pleased that the firm’s latest report did not include any unexpected lowlights.
“At least on the surface there were no major negative surprises,” said Evercore Partners analyst Ken Sena. “It looked to be a pretty solid quarter.”
Still, Mr. Sena says he’d expected a nearly flat figure for Yahoo’s display-ad revenue growth, making the business’s decline a disappointment.
While Yahoo posted a surprising rate of 14% growth in search-ad revenue excluding payments made to drive traffic, Mr. Sena said it remained unclear whether that was attributable to Yahoo or to its search partner Microsoft Corp..
Microsoft is now powering Yahoo’s search ad results as part of a revenue-sharing arrangement.
Overall, Yahoo’s fourthquarter profit fell 7. 9 % , thanks to charges stemming from the recent closure of its Korea business.
That masked a 4% overall gain in revenue excluding traffic-acquisition costs. Yahoo’s search revenue rose about 4% to US$1.22-billion.
Overall profit was US$272.3 million, or US23¢ a share, down from US $295.6million(US 24¢) a year earlier, Yahoo said. The quarter included US $99.5-million in charges related to the closure of the Korea business. Excluding such items, adjusted earnings rose to US32 ¢ a share from US25¢.
Earnings in equity interests, which are mainly composed of Yahoo’s investments in Chinese Internet giant Alibaba and in Yahoo Japan, increased 17% to $148.9 million, the company said. Analysts polled by Thomson Reuters had been expecting Yahoo to post per-share earnings of US28¢ on net revenue of US$1.22-billion.