Published On: Wed, Jan 30th, 2013

Yahoo! Steadies the Course under Mayer

With the earnings reports season in full swing, expectations from the investor community on companies’ results have been high. The latest to release the earnings report was the internet search giant, Yahoo that reported steady earnings and stayed the course as far as profits and income goes.

Given the fact that the company has had five CEO’s in as many years, all eyes were on Marissa Mayer, and how she would steer the company through an especially turbulent phase. The earnings per share took a slight dip from 24 cents per share to 23 cents per share when compared to the last year’s third quarter. The surprising aspect of the earnings was the 4 percent jump in search revenue, which came in at $482 Million. The display revenue, though, was down 5 percent at $520 Million, which should worry Mayer as she looks forward to an eventful year ahead.

The buzz around Mayer grew over the last two quarters as she succeeded in arresting the slide and restoring investor confidence. The company, which was once the darling of the tech industry has been going through a rough patch and this, is where she was expected to breathe fresh life into the company and rejuvenate it. In the brief time that she took over, Mayer succeeded in improving Yahoo’s email delivery system and the Flickr Photo service. Considering that these two offerings have become the mainstay of the company’s portfolio in recent years, investors are looking forward to an uptick in revenues from these offerings.

The reason why the company was down in the dumps a year ago and sometime before that was mainly because there was no articulated strategy by the leadership on how they plan to take on behemoths like Google and Microsoft. Given the complementarities between mobile search presence and revenues from the segment that is growing at a faster pace, it was expected that Yahoo would announce a more robust m-commerce strategy. This is something that the analysts and experts would look forward to when the company addresses the investor community in its next call. The results that were declared at the close of business this Monday were not accompanied by an earnings call.

Finally, the realization that Yahoo would be unable to dent the domineering presence of Google in all the competing segments with the latter holding a jaw dropping market share in excess of 80 percent means that the tide has not turned for Yahoo and Mayer. In this context, it is important that the company concentrates on re-evaluating some of its offerings and pursue synergies in the same way Google does with its suite of products.

In conclusion, the earnings season has been kind to companies coming as it does on the back of the ongoing recession. At the moment, the investor community is keeping its fingers crossed about the nascent recovery and the sustainability of earnings over the next quarter. It remains to be seen as to how much of the course would be steadied in this quarter.

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About the Author

- Marcus Holland has been trading the financial markets since 2007 with a particular focus on soft commodities. He graduated in 2004 from the University of Plymouth with a BA (Hons) in Business and Finance.