Yahoo Reports Sharp Decline in Revenue From Advertising

Slowing revenue from advertisement is at the heart of Yahoo’s decline in revenue. And Ms. Mayer’s efforts have done little to revitalize Yahoo’s sagging core business in digital display advertising. The number of display ads sold has declined every quarter for the last two years. Display revenue in the second quarter, which ended June 30, decreased 12 percent from the period a year earlier. Revenue from search fell 9 percent.

“The reality is, they’re in the early stage of a difficult process,” said Colin Gillis, an analyst with BGC Partners. “We are still a ways away from seeing what this management team can do.”

In recent quarters, the revenue declines have been buffered by the rising value of Yahoo’s holdings in Asia, including a 24 percent stake in Alibaba, the fast-growing Chinese e-commerce company, which is expected to make an initial public offering in the next year. Most of the 75 percent growth in the stock price under Ms. Mayer has been driven by these holdings.

“Yahoo’s flat,” Mr. Gillis said. “Alibaba is a rocket ship.”

Yahoo’s shares fell about 0.4 percent in after-hours trading.

Ms. Mayer has asked investors for patience on turning around the advertising business. She has said the company will focus first on developing its people, then its products.

Already, Yahoo has redesigned Flickr, the popular photo service, revamped its home page and released mobile apps for popular services like mail and weather. She said the refreshed products were meant to build “delightful” and “entertaining” experiences into the daily habits of users.

Mark Mahaney, an analyst at RBC Capital Markets, said the flurry of activity gave him some hope.

“We are still believers in a potential turnaround story,” he said. “Although there has been little quantifiable evidence of an improvement to date, the increased velocity of product innovation and acquisitions at Yahoo make us optimistic.”

Employees also seem to be more optimistic….

Article Source…

Leave a Reply

Your email address will not be published. Required fields are marked *