SAN FRANCISCO — Anyone looking for signs of a Yahoo turnaround will have to wait a bit longer, after a lackluster fourth quarter and a disappointing forecast.
Carol A. Bartz, who joined Yahoo as chief executive two years ago, has been trying to revive the growth after several years of sluggish results and an inability to capitalize on the rise of social networking, now dominated by Facebook.
She has cut costs, largely through a series of layoffs, while Google, for example, has added employees. She has outsourced services and plans to eliminate unsuccessful products, including the Delicious bookmarking service.
Her strategy has been to focus on Yahoo’s strengths, which include editorial content, display advertising and online communications like e-mail. Still, she says it will take time before Yahoo shows signs of major progress. The earnings report seemed to support that view.
(Source The New York Times)
Display advertising — banners and other graphic ads — was the one bright spot. But a first-quarter revenue forecast that was below analysts’ expectations sent shares down in after-hours trading.
Yahoo reported that net income in the fourth quarter, which ended in December, doubled to $312 million, or 24 cents a share compared with the year-ago quarter.
The company said revenue fell 12 percent to $1.53 billion. Virtually all the decline came from the sale of the HotJobs career site and changes to Yahoo’s search business.
The income was slightly above the adjusted income of 26 cents a share beat the 22 cents a share that was expected by analysts surveyed by Thomson Reuters. Excluding payments to advertising partners, revenue was $1.21 billion, or modestly higher than the $1.19 billion that analysts had expected.
Display advertising increased 14 percent to $635 million.
In a conference call with analysts after the report was released, Yahoo executives repeatedly referred to what they described as the company’s good momentum, and talked of their confidence that Yahoo will turn the corner in several important areas during the second half of this year. They pointed to the growth in profits and cast the decline in revenue as a natural consequence of their strategy.
“We just completed a very encouraging quarter and year for Yahoo,” Ms. Bartz said in the call. She went on to say that “we are making clear progress on our plan.”
The first-quarter revenue forecast was for $1.02 billion to $1.08 billion, compared with analysts’ expectation of $1.13 billion. In after-hours trading, shares fell more than 2 percent, to $15.64.
Youssef H. Squali, an analyst with Jefferies & Co., said that he was still waiting for Yahoo to show some signs of progress. Cutting costs is fine, he said, but what investors really want is for the company to restore growth, and that management will be intense pressure to do so later this year, as they have promised.
“As far as growth is concerned, it’s a show-me story,” Mr. Squali said. “The jury is still out on this one.”
In a sign of Ms. Bartz’s cost-cutting, Yahoo, which is based in Sunnyvale, Calif., said on Tuesday that it would eliminate 1 percent of its work force, or around 140 jobs, mostly in marketing. That follows cuts last month of another 600 jobs, most of them in the product group.
Yahoo’s layoffs contrast sharply with Google, which said on Tuesday that it would add more than 6,000 employees this year. Although Yahoo said it will continue to hire in certain areas, the disconnect between the companies and their trajectories is striking.
Not only is Google hiring, it is growing quickly, reporting a 26 percent rise in fourth-quarter revenue last week.
Yahoo has bet a big part of its revival on its search partnership with Microsoft, which has taken over its search engine and associated advertising in North America. The switch in Europe and Asia will take place this year.
But Ms. Bartz indicated that there are still issues to be worked out in terms of the financial benefits of the search partnership. Important measurements of its financial performance, including revenue per search, were below what was hoped for during the quarter, although she voiced confidence in an improvement during the second half of the year.
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