Yahoo!’s earnings indicate the company continues to struggle as a standalone entity competing with the likes of Google.
Yahoo!’s most recent quarterly earnings were a disappointment. Analysts, however, remain cautiously optimistic. The results were “bad but it’s in line with our bad expectations,” said Jim Friedland, a stock analyst with Cowen & Co.
The company’s fourth-quarter results showed profit and revenue declines. In comparison, Yahoo! rival Google reported a nearly 30 percent increase in quarterly revenue. Yahoo! saw a 13 percent decline in revenue.
Scott Thompson, who is in charge of turning around Yahoo! Inc., said that he “sees the strength of Yahoo!’s assets” and “the huge opportunity ahead of us.” Yahoo! has significant challenges in the marketplace. Scott Thompson replaced Carol Bartz after she stepped down after 14 years as chairman.
Google’s ability to let companies buy ads in bulk, including graphical, interactive and video ads, gives them an edge in the market. Google, which reported results last week, said its ad sales were rolling and currently Google is on pace to achieve $5 billion a year.
Yahoo!’s revenue drop is also due to a partnership with Microsoft Corp. Microsoft’s Bing search engine powers Yahoo! sites in return for 12 percent of Yahoo!’s search-advertising revenue. Despite cutting costs, the deal has not had a positive impact on revenue.
Despite a decline in market presence, Yahoo! Chief Financial Officer Tim Morse said, “I think we’re headed in the right direction. It’s not a matter of making wholesale changes to the strategy, but we do want to up the growth.”
When asked about his plans for turning around Yahoo!, Mr. Thompson said he would “consider different revenue streams from what we have today.”
These alternative revenue streams aim to increase Yahoo!’s data about visitors to its news, sports, entertainment and other websites, which he called the “single most underrated, underappreciated, and underused asset” at the company.
Mr. Thompson hopes that these new streams will become the “cornerstone” of future growth. Still, however, it is anticipated that he will lay off some employees at the Sunnyvale, Calif. company later this year.