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 Mayer told analysts on Tuesday that new mobile and advertising
initiatives were gaining momentum, positioning the company for a
period of stable but modest growth. Revenue from its core display
advertising business inched 2 percent higher in the first quarter,
reversing several consecutive quarters of declines.
But the company forecast second-quarter revenue, excluding fees paid
to partner websites, of $1.06 billion to $1.1 billion. That suggests
revenue could decline by as much as 1 percent or rise by up to 2.7
percent from $1.07 billion a year earlier, underscoring the
challenges facing its business.
That did not faze Wall Street, which is focused primarily on Yahoo's
24 percent stake in Alibaba Group Holding Ltd, the Chinese
e-commerce giant that is expected to go public later this year.
Yahoo's shares climbed 7 percent on strong results from Alibaba.
"It's really Alibaba driving things," said Macquarie Research
analyst Ben Schachter. Yahoo's core business improved slightly in
the first quarter, but "really the story here is Alibaba and the
somewhat unexpected re-acceleration" of its revenue growth.
The Chinese company's revenue increased 66 percent to $3.06 billion
in the fourth quarter, according to slides that Yahoo posted on its
investor relations website on Tuesday, faster than the 51 percent
growth in Alibaba's third quarter.
Yahoo reports the Chinese company's financial results one quarter
later than its own.
CHEAPER ADS PROLIFERATE
Mayer is trying to revitalize Yahoo's business. The former Google
Inc executive revamped many of Yahoo's Web products but its ad sales
business continues to struggle while rivals such as Google, Facebook
Inc and Twitter Inc continue to post strong, double-digit revenue
growth.
Revenue from display ads, which accounts for roughly 40 percent of
Yahoo's overall sales, increased just 2 percent to $453 million,
excluding partner fees. That meager growth follows several
consecutive quarters of decline in the display ad business.
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Yahoo said it was making progress in developing new mobile
technology, online video, social media and new ad formats. The
company now counts 430 million monthly users of its mobile products,
while the number of online video streams consumers watched increased
30 percent from the fourth quarter.
Finance chief Ken Goldman said that so-called "stream ads" that
appear in-between scrolling news headlines on Yahoo's Web pages now
account for about a fifth of the number of display ads that the
company serves. He noted that stream ads were priced lower, weighing
on the company's total average price per display ad, which declined
5 percent.
Goldman did not provide any update on how Yahoo might use the
proceeds from the Alibaba IPO, during which Yahoo is required to
sell 40 percent of its stake in the company.
Alibaba, valued at more than $140 billion, is expected to go public
later this year in the United States in the largest IPO since
Facebook's debut in 2012.
Yahoo's revenue, excluding fees paid to partner websites, came to
$1.087 billion in the first quarter, up from $1.074 billion in the
year-ago period. Analysts polled by Thomson Reuters I/B/E/S had
expected adjusted revenue of $1.077 billion.
It had net income of $311.6 million, or 29 cents a share, in the
first quarter. It earned 38 cents a share excluding certain items.
(Reporting by Alexei Oreskovic; editing by Alden Bentley and Richard
Chang)
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