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Yahoo's 3Q results drop along with ad prices

October 15. 2013 5:37PM
Associated Press

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(AP) Yahoo is regaining its appeal among investors a lot faster than with the online advertisers who generate most of its revenue.

The company's third-quarter numbers released Tuesday are the latest to underscore the challenges facing CEO Marissa Mayer even as Yahoo's stock continues to soar under her leadership. The shares have more than doubled since Yahoo lured Mayer away from rival Google Inc. 15 months ago, largely because investors prize Yahoo's 24 percent stake in Chinese Internet star Alibaba Group Holding.

Alibaba is already making far more money than Yahoo while growing at a rapid pace that bodes well for the future.

Yahoo Inc., meanwhile, is still struggling to revive its revenue growth even though advertisers are spending more on online ads. Most of that money, though, is flowing to search leader Google and social networking leader Facebook Inc.

Mayer, 38, has been pleading patience, saying it may take another year or two before Yahoo's sales are growing at the same rate as the overall market. In the first half of this year, Internet ad spending climbed 18 percent from the same period in 2012.

Yahoo's revenue slipped in the three months ending in September as the company saw declines in two advertising categories. It sold fewer display ads and fetched lower prices, and although the text ads next to the search results on Yahoo's website drew more clicks, the amount of money marketers paid for those commercial pitches declined.

The Sunnyvale, Calif. company earned $297 million, or 28 cents per share, in the three months ending in September. That's a 91 percent drop from nearly $3.2 billion, or $2.64 per share, at the same time last year.

It wasn't an apples-to-apples comparison because last year's profit was lifted by a $2.8 billion windfall from Yahoo's sale of part of its stake in Alibaba Group.

If not for certain items unrelated to its ongoing business, Yahoo said it would have earned 34 cents per share. That figure was a penny above the average estimate among analysts surveyed by FactSet.

Revenue fell 5 percent from last year to $1.1 billion.

After subtracting ad commissions, Yahoo's revenue stood at $1.08 million to match analyst projections.

Yahoo's stock dipped 26 cents to $33.12 in extended trading after the results came out.

Associated Press

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