Yahoo! Inc. (YHOO: Quote) said Tuesday its second quarter profit dropped from last year, hurt mainly by restructuring charges. Results were also impacted by a slight decline in revenues, even as the company registered growth in the Americas and Asian regions. Nonetheless, Yahoo!'s quarterly earnings easily topped Street estimates.
Yahoo!, which has seen an erosion in its business, on Monday named Marissa Mayer as its chief executive officer. Mayer is one of the earliest employees of Google Inc. (GOOG), and Yahoo! believes her rich experience at Google will help boost its prospects.
The company, which has had its share of executive upheavals, fired Scott Thompson as CEO in mid-May for having embellished his academic credentials. Thompson, who was Yahoo!'s fourth CEO in five years, was replaced on an interim basis by Ross Levinsohn.
Yahoo! faces stiff competition and is finding ways to reinvent itself amid dynamic business conditions. Most of its offering are for free and it needs to attract more ad revenues to boost performance. The company has not been able to keep pace with competition in search business from Google, as well as from Facebook Inc. (FB).
Yahoo! recently agreed to settle patent disputes with Facebook, thereby allowing both companies to share patents and has also worked out a strategic content-sharing alliance with business news provider CNBC.
Sunnyvale, California-based Yahoo! in its second quarter reported revenues of about $1.22 billion, down 1 percent from last year.
Excluding traffic acquisition costs, or ex-TAC, revenues for the quarter were essentially flat at $1.08 billion. Twenty-nine analysts expected revenues of $1.10 billion for the quarter.
Traffic acquisition costs are payments made by internet search companies to affiliates or online firms that direct consumer and business traffic to their websites.
Search revenue ex-TAC was $385 million, up 4 percent from last year, and Display revenue ex-TAC edged up 1 percent to $473 million. Other revenue ex-TAC slid to $221.9 million from $238.7 million.
The company reported second quarter net income of 226.6 million, compared to $237 million last year. On a per share basis, earnings were unchanged from last year at $0.18, on a lower share count.
Results for the quarter include restructuring charges of $129 million, among other items. Excluding items, adjusted earnings for the quarter were $326.6 million or $0.27 per share.
On average, 22 analysts polled by Thomson Reuters expected earnings of $0.23 per share for the quarter. Analysts' estimates typically exclude special items.
"In the second quarter, non-GAAP earnings per share exceeded consensus and both display and search revenue ex-TAC showed modest growth," said Tim Morse, chief financial officer.
"We also moved aggressively with new strategic agreements with Alibaba and Facebook and announced several new partnerships including CNBC, Clear Channel and Spotify."
Yahoo! in May reached an agreement to unload its holdings in Alibaba Group in three tranches after several failed attempts earlier. Yahoo agreed to sell back half of its 40% stake to the Chinese e-commerce firm in a cash and stock deal valued at about $7.1 billion.
Of the remaining 20% stake, a 10% stake will be divested through an initial public offering of Alibaba in future. Alibaba will be required either to repurchase the stake at the IPO price or allow Yahoo to sell the shares in the IPO.
YHOO closed Tuesday at $15.60, down 0.29%, on a volume of 30.4 million shares on the Nasdaq. In after hours, the stock gained 0.51%. In the past year, the stock has traded in a range of $11.09 - $16.79.
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by RTT Staff Writer
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