Yahoo Has Yet to See Turnaround, Concerns Mount about Ad Revenue

By Ed Silverstein January 29, 2014

Marissa Mayer, who has been Yahoo's CEO for over a year, didn’t have the best news to report this week about the recent quarter.

Revenue and profits dropped in Q4 of 2013 and the decline is likely to continue in Q1, according to company statements. Q4 revenue was $1.27 billion, which is 6 percent lower than the $1.35 billion seen in Q4 of the previous year.

Despite a plan to turnaround the company, the all-important Internet advertising remains below where Yahoo would like it. Yet, Facebook and Google are expected to see increases in mobile advertising, in contrast to Yahoo, according to The New York Times. In 2013, Yahoo was in third place for digital ads trailing Google and Facebook, according to data from eMarketer, cited by The Times.

Also, sales of banner and video ads dropped 6 percent in Q4 at Yahoo and search ad sales edged down 4 percent. Display ads, excluding traffic acquisition, totaled $491 million in Q4, which is 6 percent less than the $520 million seen in Q4 of 2012, according to TechCrunch.

In reviewing Yahoo’s decline in display ad revenue, it represents about 41 percent of the company’s overall revenue, according to The Wall Street Journal.

“It continues to dramatically underperform,” Mark Mahaney, an analyst at RBC Capital Markets, told The Times about Yahoo. “There is a window of opportunity, and of course, it’s closing, as you see innovation and momentum for other platforms like Twitter and Facebook.”

There seems to be pressure mounting on Mayer to bring about a turnaround at Yahoo. As for now, she said in a webcast it “would take years for Yahoo to become truly competitive,” The Times reported. An interesting question is how much time the board of directors and the shareholders will give to Mayer to turn the company around. Patience may be limited. 

But she is generally positive about the future. "We saw continued stability in the business, and our investments allowed us to bring beautiful products to our users and establish a strong foundation for revenue growth," Mayer said about Q4 in a statement.

There was some better news in the recent results. Net income in Q4 was $352 million compared to $274 million in the prior quarter. Helping the recent total was $49 million from the sale of patents. Also, Yahoo saw more mobile users. In Q4, about 400 million users employed smartphones and tablets to get on the site. Since coming on board, Mayer has acquired more than 20 companies and last year Yahoo acquired Tumblr for $1.1 billion.

Also, Mayer does not expect to replace Henrique de Castro who was recently fired as Yahoo’s chief operating officer – in part because of disappointing ad sales.

Another bright spot for Yahoo has been its stock price which increased over 80 percent during the last year. The increase appears to be related to the 24 percent stake Yahoo owns in Alibaba. The company’s forthcoming IPO will lead Yahoo to earn billions of dollars, according to CNN.

Looking at the entire 2013, there was mixed news. Revenues for 2013 were $4.7 billion, which is a 6 percent decline. Net income was $590 million, which is a 4 percent increase. Display revenue excluding traffic acquisition was $1,737 million for all of 2013, which is a 9 percent drop from the $1,899 million for 2012. On the other hand, search revenue excluding traffic acquisition was $1,699 million for all of 2013, a 6 percent increase compared to $1,611 million for 2012.




Edited by Cassandra Tucker

TechZone360 Contributor

SHARE THIS ARTICLE
Related Articles

6 Challenges of 5G, and the 9 Pillars of Assurance Strategy

By: Special Guest    9/17/2018

To make 5G possible, everything will change. The 5G network will involve new antennas and chipsets, new architectures, new KPIs, new vendors, cloud di…

Read More

Putting the Flow into Workflow, Paessler and Briefery Help Businesses Operate Better

By: Cynthia S. Artin    9/14/2018

The digital transformation of business is generating a lot of value, through more automation, more intelligence, and ultimately more efficiency.

Read More

From Mainframe to Open Frameworks, Linux Foundation Fuels Up with Rocket Software

By: Special Guest    9/6/2018

Last week, at the Open Source Summit, hosted by The Linux Foundation, the Open Mainframe Project gave birth to Zowe, introduced a new open source soft…

Read More

Unified Office Takes a Trip to the Dentist Office

By: Cynthia S. Artin    9/6/2018

Not many of us love going to see the dentist, and one company working across unified voice, productivity and even IoT systems is out to make the exper…

Read More

AIOps Outfit Moogsoft Launches Observe

By: Paula Bernier    8/30/2018

Moogsoft Observe advances the capabilities of AIOps to help IT teams better manage their services and applications in the face of a massive proliferat…

Read More