Yahoo squeezes out some growth in third quarter

Yahoo CEO Marissa Mayer
Yahoo CEO Marissa Mayer at CES 2014. Source: IDGNS

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22 October 2014 | 0

Yahoo reported a 1% sales increase on Tuesday, a marked shift after multiple quarters of decline, though results in its critical ad business were mixed.

The company also said its mobile revenue had become significant enough to report for the first time, passing $200 million. That was a minor victory for CEO Marissa Mayer, who’s been trying hard to get more traction for Yahoo on smartphones and tablets.

“We had a good, solid third quarter,” Mayer said in the company’s announcement Tuesday.

Total sales for the quarter, ended 30 September were $1.15 billion, up from $1.14 billion last year, the company reported. Excluding traffic acquisition costs, revenue was $1.09 billion and slightly ahead of analyst expectations, as polled by Thomson Reuters.

Net income was $6.77 billion, or $6.70 a share, driven largely by an after-tax profit of $6.3 billion from the sale of Yahoo’s stake in e-commerce giant Alibaba in the Chinese company’s IPO last month.

Yahoo’s adjusted earnings per share was $0.52, clobbering analyst estimates of $0.30.

Much of the success in mobile came from so-called native ads, which are designed to look like the editorial content that appears around them.

“We are moving from a company that makes Web pages and money through banner ads to a company that makes mobile apps and monetises them through native ads,” Mayer said in a conference call to discuss the results.

Since she took over as CEO in 2012, the company has made numerous mobile acquisitions and revamped mobile offerings in the areas of news, e-mail, weather, and photos with Flickr.

But declines in traditional desktop display ads persisted, Mayer said.

Display ad revenue rose by 5% to $447 million, and the number of display ads sold increased by 24%. But the amount paid for those ads dropped by 24%.

In search advertising, revenue rose by 4%. The number of paid clicks was flat, and the price-per-click paid rose by about 17%, Yahoo said.

In the after-hours market, Yahoo’s stock was trading at $41.33 at the time of this report, up 2.3% from the close of regular trading.

IDG News Service

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