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October 21, 2014

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Yahoo’s 4Q results dragged down by revenue drop

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Julie Jacobson / AP

Yahoo President and CEO Marissa Mayer speaks during a keynote address at the International Consumer Electronics Show, Tuesday, Jan. 7, 2014, in Las Vegas. Mayer unveiled the latest steps in her effort to accelerate Yahoo’s lackluster revenue growth.

SAN FRANCISCO — Yahoo's latest quarterly report shows CEO Marissa Mayer is still having trouble bringing in more revenue as online advertisers spend more money at Google, Facebook and other rivals.

The fourth-quarter results announced Tuesday serve as the latest reminder of challenges facing Yahoo Inc. The long-slumping Internet company hoped to revive its revenue growth when it lured Mayer away from a top job at Google Inc. 18 months ago.

So far, though, Yahoo's revenue remains stuck in a rut. The company's earnings are rising largely because of cost-cutting measures and lucrative investments in two Asian Internet companies, China's Alibaba Group and Yahoo Japan. Both were made before Mayer's arrival.

Yahoo Inc. earned $348 million, or 33 cents per share, a 28 percent increase from $272 million, or 23 cents per share, a year earlier.

Excluding certain one-time items, Yahoo earned 46 cents per share. That figured topped the average estimate of 39 cents per share among analysts surveyed by FactSet.

Revenue fell 6 percent to $1.27 billion. After subtracting commissions paid to Yahoo's ad partners, revenue totaled $1.2 billion, in line with analysts' projections.

Yahoo's 24 percent stake in Alibaba has been particularly valuable because the Chinese company is still growing rapidly as it prepares for an initial public offering of stock. Numbers released Tuesday by Yahoo show that Alibaba's revenue surged 51 percent in the third quarter. There is a one-quarter lag between when Alibaba closes its quarter and Yahoo collects its share of Alibaba's earnings.

Alibaba's allure is the main reason Yahoo's stock has more than doubled since Mayer became CEO. But some of those gains are starting to fade as investors become weary of waiting for her to deliver on her promise to boost Yahoo's ad sales.

Yahoo's stock fell $1.12, or nearly 3 percent, to $37.10 after the fourth-quarter numbers came out.

Mayer, 38, appears to be getting frustrated, too. Earlier this month, she dismissed Chief Operating Officer Henrique de Castro, who was in charge of the company's advertising. Mayer had enticed him away from Google in late 2012 with a pay package valued at $58 million at the time.

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