Today Yahoo reported its first quarter financial performance, including revenue of $1.14 billion, and earnings per share of $0.35 on a GAAP basis, and $0.38 on a non-GAAP basis. Analysts and the street had expected revenue of $1.1 billion, and earnings per share of $0.25.
For the quarter, Yahoo had display revenue of $455 million, and search revenue of $425 million. Both of those figures are down on a year by year basis. Still, as the company noted in its release, its GAAP income on a yearly basis is up, rising from $169 million in the first quarter of 2012, to $186 million in the past quarter.
For reference, display revenue for the company was $591 million in its last quarter, and search revenue of $482 million.
During the quarter, Yahoo repurchased $775 million of its publicly traded equity, or approximately 38 million shares. The company now has a total of $5.4 billion in cash, equivalents and marketable debt. That figure is down from $6 billion at the end of 2012, reflecting a decline in Yahoo’s total cash position. Yahoo’s true cash accounts are down substantially in the last three months, slipping from $2.67 billion at the end of the year, to a mere $1.17 billion.
Yahoo has a struggle ahead of it. Today’s reported figure of $1.14 billion in revenue is underwater when compared to its Q1 2012 revenue tally of $1.22 billion.
The company has enjoyed a dramatic rise in its stock price since Marissa Mayer, of Google fame, took the reins. The company has revamped its operations, focusing on the mobile space. For a company mostly associated with the desktop portal business, this is not a small shift in strategy.
The company is actively buying companies with strong mobile talent to bolster its development chops. Most recently, Yahoo purchased Summly, a company with a young founder, technology that some questioned regarding its originality, and a price tag – around $30 million – that was perhaps confusing in its size. However, Yahoo appears determined to acquire that which it wants to hire, but cannot.
Marissa Mayer 大力加速 Yahoo 網路廣告關連之新併購
Yahoo 執行長 Marissa Mayer 上任 300 多天，賣掉價值 47 億美元的阿里巴巴持股，然後買了Stamped、OntheAir、Snip.it、Alike、Jybe、Summly、Astrid、GoPollGo、Milewise 和 Loki Studios 等小型新創公司，至少網羅了 22 位創業者。
一年來的併購舉動，在大手筆花 11 億美元買下微網誌 Tumblr 的這一刻來到最高潮，同時間，Mayer 把 Flickr 擴大為免費服務，每一個 User 都有 1 tb 的免費空間。《紐約時報》也引述消息來源說，Mayer 正在與 Foursquare 和 Quora 接觸，打算買下他們廣大的使用者社群。
科技網站《Verge》和《Forbes》都認為，花掉 1/6 的現金部位買下 Tumblr，Mayer 看中的不只是未來的營收可能性，更重要的是 Tumblr 相對年輕的使用者、蓬勃的社交流量，以及最重要的，關連性（relevance）。
買微網誌 Tumblr、擴大相簿 Flickr 免費服務，同時賣掉無名小站
當媒體聚光燈全部打向 Mayer 的購物車時，大家卻忽略 Mayer 讓 Yahoo 重回業界核心的措施中，還有一常串的垃圾桶清單。Upcoming、Yahoo Deals、Yahoo SMS Alerts、Yahoo Kits 等，在這份清單裡，台灣的無名小站名列其中。
註：Yahoo 執行長 Marissa Mayer 是一位眼明手快的領導，決策速度之快令人驚訝，將為 Yahoo 帶來新機會與挑戰，勿小看 Marissa Mayer，她是能增加 Yahoo 獲利增加快速決策的人。也建議 Yahoo 主要 Ads solution 可透過 search、mobile apps、blog embedded search 等等之多重管道來增加收入；
Yahoo's Turnaround Not Progressing As Planned but profit increase a jump
Yahoo (YHOO) reported lackluster second-quarter results that showed its turnaround is not progressing as planned. The firm's revenue (excluding traffic acquisition costs-TAC) dropped modestly from the same period a year ago, while non-GAAP income from operations fell 13% (adjusted EBITDA decreased 7%). Earnings in equity interests, which include its 24% stake in China-based Alibaba Group and 35% ownership in Yahoo Japan, advanced nearly 25% (representing one of the few bright spots in the quarter). Non-GAAP net earnings per share jumped 19%, to $0.35, better than the consensus estimate, but the performance was bolstered primarily by a reduced share count. The quarter was a low-quality beat, in our view, and we're particularly discouraged by Yahoo's core top-line performance.
We continue to give CEO Marissa Mayer the benefit of the doubt as she tries to steer the Internet giant back to growth. The firm launched the new Yahoo! News, redesigned Yahoo! search, rolled out a variety of apps (Yahoo! Sports, Yahoo! Weather), and made nine acquisitions during the period (including Tumblr, one of the fastest-growing media networks). Share buybacks and the Tumblr deal drained the firm of $1.65 billion in cash, though the outflows were generally offset by proceeds from its partial Alibaba sale. In terms of freshening up the product suite, we're seeing some tangible progress.
Still, we cannot overlook the decline in Yahoo's core business. Display revenue (ex TAC) fell 11% during the period, while price-per-ad dropped an uncomfortable 12% as a result of stiffer competition. Search revenue (ex TAC) increased 5%, but price-per-click fell 8%. We just can't get comfortable with Yahoo's core business when the firm is experiencing such pricing pressure. Google (GOOG) and Facebook (FB) are much better positioned to capture marketers' budgets, and we're seeing this fierce competition in Yahoo's numbers (despite Mayer's efforts at a turnaround). The trend in global display pricing is particularly concerning (bottom right in image below, green bar), given the strength we witnessed through much of 2012.
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| In Smart Mobile Side, Yahoo can acquire apps like LINE or migrate into Smart mobile by FireFox OS |
Looking ahead, the firm updated its business outlook for 2013. Revenue (ex TAC) is expected in the range of $4.45-$4.55 billion (was $4.5-$4.6 billion), while non-GAAP operating income is anticipated to come in between $900 million and $1 billion for the year (was $1.05-$1.1 billion). Adjusted EBITDA is targeted in the range of $1.55-$1.65 billion (was $1.6-$1.7 billion). Cutting full-year guidance certainly suggests the turnaround is not going as planned at Yahoo.
Valuentum's Take
CEO Marissa Mayer has made some big changes at Yahoo, but the firm's core business continues to decline (while pricing pressures intensify). Though the guidance cut suggests Yahoo's turnaround is not progressing as planned, we're not ready to throw in the towel just yet on Mayer. The firm retains some valuable assets in Alibaba and Yahoo Japan (shown in image below), both of which we'll look for Yahoo to monetize in a cash-rich, tax-efficient way in coming periods. Still, we're not compelled to own shares at current levels.
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