Yahoo posted a modest revenue increase and a big jump in profit thanks to the sale of its ownership stake in Alibaba, as new CEO Marissa Mayer released her first earnings report since taking charge of the struggling
Yahoo reported $1.2 billion in revenue for the quarter that ended in September, or $1.09 billion after subtracting commissions paid to advertising partners. The latter figure was up 2 percent from the same period a year ago, and slightly beat Wall Street expectations.
Net income soared to $3.1 billion, thanks to a gain of $2.8 billion from the sale of its stake in Alibaba, the Chinese e-commerce site. Earnings per share amounted to $2.64, or 35 cents after subtracting the Alibaba proceeds and other one-time items.
"Yahoo had a solid quarter," Mayer said in a statement, adding: "We're taking important steps to position Yahoo for long-term success."
Wall Street analysts polled by Thomson Reuters were expecting Yahoo to report earnings of 24 cents a share, or 26 cents a share after excluding one-time expenses, on revenue of $1.08 billion after excluding commissions.
But analysts have said they're primarily interested in hearing Mayer talk about her plans for the company during Yahoo's financial conference call Monday. Several said they were less concerned about Yahoo's earnings in the last quarter, since it's too soon for the new chief executive to have much effect on the company's financial performance.
Mayer, a former top executive at Google (GOOG), was named CEO in July after Yahoo's previous chief executive, Scott Thompson, was forced to resign over inaccuracies in his resume. Thompson had only been on the job a few months; he was hired from eBay (EBAY) in January after Yahoo's board fired CEO Carol Bartz in frustration over her inability to turn the company around.
In her first three months, Mayer has launched a redesign of Yahoo's home page and told employees she wants to develop new online products and mobile services. She's also filled several key positions by recruiting outside the company and offering rich rewards: Yahoo's new chief operating officer, former Google advertising executive Henrique de Castro, will get a pay package valued at nearly $62 million over the next four years.
The 37-year-old Mayer has been busy in her personal life as well: She gave birth to her first child last month, returning to work after just two weeks of maternity leave.
But she has said little in public about her vision for Yahoo's future. While she is not expected to lay out a detailed strategy during the earnings call on Monday, several analysts said they would like to hear at least some of her plans.
Yahoo's earnings have shown a slight improvement over the last two quarters, though revenue and profit have declined in recent years. While the company has lost advertising business to newer competitors, Internet industry analyst Colin Gillis of BGC Financial argues that it can be turned around.
"We continue to see value in Yahoo," he wrote in an email Monday, despite what he called a "series of direction changes in Yahoo strategy, the rotating door of senior management, and our concern that expenses are going to rise near-term while revenue is flat-to-down."
He added: "If the current board and management are able to modestly improve the outlook for the firm, and not squander the assets on the balance sheet, it should be possible to improve cash flows over the next 18 months."
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