Menu
Yahoo revenue drops as ad business flounders

Yahoo revenue drops as ad business flounders

The company has to work faster to make up for the drop, CEO Marissa Mayer says

Yahoo's earnings for the second fiscal quarter of 2014.

Yahoo's earnings for the second fiscal quarter of 2014.

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.

Zach Miners covers social networking, search and general technology news for IDG News Service. Follow Zach on Twitter at @zachminers. Zach's e-mail address is zach_miners@idg.com

Follow Us

Join the New Zealand Reseller News newsletter!

Error: Please check your email address.

Tags business issuesInternet-based applications and servicesYahoofinancial resultsmobileinternet

Slideshows

Top 50 defining moments of the New Zealand channel in 2016

Top 50 defining moments of the New Zealand channel in 2016

Reseller News looks back on a tumultuous 12 months for the New Zealand channel, assessing the fallout from a year of sizeable industry change. Whether it be local or global mergers and acquisitions, distribution deals or job changes, the channel that started the year differs somewhat to the one set to finish it - Reseller News assesses the key moments that made 2016.​

Top 50 defining moments of the New Zealand channel in 2016
​Hewlett Packard Enterprise honours high achieving NZ channel

​Hewlett Packard Enterprise honours high achieving NZ channel

Hewlett Packard Enterprise honoured its top performing Kiwi partners at the second running of its HPE Partner Awards in New Zealand, held at a glitzy ceremony in Auckland. Recognising excellence across eight categories - from distributors to resellers - the tech giant celebrated its first year as a standalone company, following its official split from HP in 2015.

​Hewlett Packard Enterprise honours high achieving NZ channel
Nutanix treats channel partners to Christmas cruise

Nutanix treats channel partners to Christmas cruise

Nutanix recently took to the seas for a Christmas Cruise around Sydney Harbour with its Australia and New Zealand staff, customers and partners to celebrate a stellar year for the vendor. With the sun out, they were all smiles and mingled over drinks and food.

Nutanix treats channel partners to Christmas cruise
Show Comments