Yahoo Earnings–I'm Not So OK After All, but That's OK
So after this initial post yesterday, I had a chance to get a closer look at Yahoo’s earnings announcement and these are my four takeaways of its execs’ main points:
We know, it’s not good.
We have officially reached the bottom and things might even be looking up.
And no cows.
Sacred, that is, meaning no one at Yahoo is safe from the all-seeing eye of new CEO and Yahoo co-founder Jerry Yang.
“We want to dramatically improve our performance,” Yang said in a conference call with investors. “I am very well aware of the significant challenges we face.”
Indeed. Yahoo served up lowered expectations all around for the second quarter, with net income at $161 million, or 11 cents a share. This was down from a year ago–$164 million, or 11 cents a share. The quarterly revenue (excluding certain payments to ad partners) rose to $1.24 billion, up 11%.
And the Internet giant also dinged its prospects for the rest of the year, blaming a falloff in display advertising. Overall, that means between $4.9 billion and $5.19 billion in revenue, compared to previous forecasts between $4.95 billion and $5.45 billion.
One bright light: its long-in-the-making overhaul of its search ad system, called Panama, was showing gains of 15% to 20%.
During the call, Yahoo execs–which also included new President Sue Decker and also new CFO Blake Jorgensen, as well as Yang–spent a little too much time looking backward about where it went wrong and a little too little time on highly specific steps it needed to take to really move the needle at the company, which does not want to become moribund.
But that kind of moping was expected given the bad news Yang had to deliver now that former CEO Terry Semel, and also many of his execs, had left the scene.
Now it is up to Yang in his self-proclaimed 100-day, top-to-bottom look at Yahoo to really shake things up, which might be a little hard since the team he has now has still largely been the team in place (OK, different places, but still…) at Yahoo for a long time. Many worry both Yang and Decker are naturally conservative and that might be an issue going forward.
“There is no one from the outside in the top tiers,” said one former exec at Yahoo. “And they need a little bit of bold and crazy.”
Much like Yahoo rival Google, the acquisition-crazy, big-media-fight-picking, let’s-try-your-wacky-idea search giant, which can only act this way because it is minting money in the online ad business.
Google, which will announce earnings tomorrow, showed continued strength yesterday in that arena, according to data from the eMarketer research firm. It is estimated to get 27.4% of U.S. online ad dollars this year on a $21.7 billion total. That bests Yahoo’s 16.3% share and widened the gap from last year.
It’s enough to make a sacred cow turn into a scared one.
More, of course, to come on what Yang should do in his 100-day battle for the soul of Yahoo.
Please see this disclosure related to me and Google.