Yahoo Reports Net Income Decrease Of 5% (NASDAQ: YHOO)
Yahoo reported declining revenue and profit for the second consecutive quarter. Net income dropped 5% in the fourth quarter, to $296 million or $0.24 a share, from the same quarter a year ago. Revenue decreased 3%, to $1.17 billion. Wall Street analysts predicted revenue of $0.24 a share, but expected higher revenue of $1.19 million. Colin Gillis an analyst with BGC Financial, said, “No fireworks here. It was a lackluster quarter.”
The first earnings announcement under Scott Thompson, Yahoo’s new chief executive, made no mention of a new strategic direction. Yahoo’s board underwent a strategic review that included selling its Asian assets back in September, but the company made no mention of the deal in its earnings call with analysts. Mr. Thompson said, “The work is ongoing. I believe there is big potential at Yahoo, much bigger than the outside world envisions today.” Yahoo’s earnings announcement did detail more cost-controls and declining revenue.
Operating income increased 10% from the same quarter a year ago. The company has shifted its focus to cutting costs and building on its strength in online editorial content. Yahoo is the most trafficked news site online with 702 million monthly users. Mr. Thompson acknowledged, “the sheer number of users will not get us to where we need to be. We need to improve the quality of customer experiences.”
Yahoo’s display advertising business fell 4%, to $546 million, compared with the same quarter a year ago. The overall market for display advertising in the United States grew 23.5%, to $9.2 billion last quarter. Mr. Thompson said, “Getting our display advertising business on the right course is what I spend all my waking moments thinking about.”
Yahoo continues to lose online display advertising share to Facebook and Google, dropping to 11% of the market this year from 13.3% in 2010. Google’s share increased to 40.8%, from 38.5%, and Facebook’s share of the market reached 6.4%, up from 4.6% for the same period last year.