The third-quarter earnings results for Yahoo beat analyst expectations. Net revenue was $1.09 billion compared with $1.07 billion in the year ago period. Yahoo earned $177 million in income from operations and reported adjusted net earnings of $0.35 per share in the third quarter, after excluding a $2.8 billion gain related to the sale of Alibaba Group shares.
Yahoo future plans will attempt to improve its performance and find opportunities within its existing businesses. The goal is to focus Yahoo’s efforts around the daily habits of users, such as email, the home page, Internet search, and mobile devices. A coherent strategy to manage the industry’s transition to mobile devices is the top priority.
Yahoo Chief Executive Marrisa Mayer believes the company has been underinvesting in the “mobile wave”. The company failed to capitalize on the shift to smartphones and “splintered” Yahoo’s brands in its previous efforts, she commented. The plan is to modernize Yahoo’s websites and make them more smartphone-friendly. Mayer said, ‘The mobile wave is a huge wave for us to ride.”
Buoying investor sentiment, Mayer’s comments also touched on a preference for smaller-sized acquisitions rather than blockbuster deals and a plan for using share buybacks to distribute the gains from the sale of Yahoo shares in China’s Alibaba Group. Mayer said, “We’re committed to going back to our roots as a consumer internet company focused on user experience,” and added, “We intend to win.”
RBC analyst Andre Sequin said, “For people who weren’t sure how she was going to come across on her first call, she definitely proved herself tonight. It seems like she really recognizes what the company is, where the strengths are and what the opportunities are.”
Even though it is regarded as an internet pioneer, in recent years the company has fallen behind its more innovative rivals. Nearly 700 million users visit a Yahoo website every month, but the amount of activity people engage in on many sites is gradually declining. Yahoo makes most of its money from online advertising. Search revenue, excluding fees paid to partner websites, rose 11% in the third quarter, to $414 million. Display advertising revenue was flat at $452 million.