SUNNYVALE (dpa-AFX) - Yahoo Inc (YHOO) Tuesday reported a drop in second-quarter profit, hurt mainly by weak display advertising revenue, with both earnings and revenue falling short of Wall Street estimates.
CEO Marissa Mayer expressed disappointment with the results, stating that display remains an area of investment and transition, and Yahoo needs to fend off the negative trends.
Mayer, who has been leading Yahoo for about two years, is under pressure to resuscitate the company's waning display business. Although Yahoo went through some refurbishing and introduced a suite of web, mobile, and video ad products, consumer preference has not been very impressive.
Sunnyvale, California-based Yahoo posted second-quarter net earnings of $269.7 million or $0.26 per share, compared with $331.2 million or $0.30 per share last year.
Excluding items, adjusted earnings for the quarter were $381.7 million or $0.37 per share. On average, 28 analysts polled by Thomson Reuters expected the company to earn $0.38 per share for the quarter. Analysts' estimates typically exclude special items.
Revenue for the second quarter dropped 4 percent to $1.08 billion from $1.14 billion a year ago.
Excluding traffic acquisition costs, or TAC, revenue fell 3 percent to $1.04 billion for the quarter. Thirty analysts had a consensus revenue estimate of $1.08 billion for the quarter.
Revenue from display advertising, excluding TAC, fell 7 percent; search revenue, excluding TAC, was up 6 percent.
Yahoo also announced a deal with Alibaba Group to reduce the number of shares it is required to sell in the Chinese e-commerce company's impending IPO; Yahoo will sell 140 million shares instead of 208 million shares initially planned.
Yahoo has a near 24 percent stake in Alibaba, which is valued at about $140 billion. Yahoo said that it is committed to return at least half of the IPO proceeds to shareholders.
Yahoo closed Tuesday's regular trade at $35.61, down $0.09 or 0.25%, on a volume of 25.6 million shares on the Nasdaq. In after hours, the stock gained $0.54 or 1.52%.
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