Yahoo! shares slide on dismal sales

Investors want Marissa Mayer to show them the money, as Yahoo's revenues keep on falling.

by Rachel Savage
Last Updated: 29 Jan 2014

Yahoo shares fell after it reported revenues declined for the fourth quarter in a row, as the chief exec Marissa Mayer’s turnaround plan continues to struggle to lift advertising sales.

The internet giant was down as much as 7% to $35.60 in after-hours trading in New York, after sales slid 6% year-on-year to $1.27bn (£760m) in the three months to the end of 2013. That was in line with analysts’ estimates, so the devil, for Yahoo, was in the details.

The amount Yahoo charged per display ad fell 7% from the previous year, despite selling 3% more ads, as competition from Facebook, Google et al pushed prices down. That meant display revenue, which accounts for 44% of sales, fell 6%.

The slipping ad margins come after Mayer fired her deputy, chief operating officer Henrique de Castro, two weeks ago, just 15 months after poaching him from her old company Google.

In a conference call, Mayer blamed the decision on ‘fit’ (not a flagging turnaround plan then). ‘That was a very regrettable conclusion, and we tried to avoid it, but ultimately it was the right decision for the company,’ she said.

Yahoo’s net profit was up 28% to $348m in the quarter. However, $49m of that was down to selling off patents.

‘I'm encouraged by Yahoo's performance in Q4 and 2013 overall,’ Mayer said, rather predictably. ‘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.’

Yup, the newly-launched Yahoo Mail is so ‘beautiful’ that only 25% of Yahoo’s own staff were using it back in November. Mayer must know that Yahoo can’t keep relying on advertising and also-ran emails, but doesn’t seem to have found those magic new revenue streams.

‘It’s a dismal outlook,’ said Colin Gillis, an analyst at BGC Partners in New York. ‘There’s going to be more pressure to perform as the year progresses.’

Looks like the pressure’s already on for Mayer, who’s been trying to turn the good ship Yahoo around since mid-2012. Having ditched De Castro, his former lieutenants now report directly to her, so there’ll be no firing gun to hide behind anymore if sales keep on sliding.

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