Kara Swisher

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Yahoo Q2 Earnings Call: The Marissa and Ken Show, Now in Living Color

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Yahoo is just starting the analyst call of its Q2 earnings, which were pretty lackluster. But CEO Marissa Mayer, who is awfully good at this kind of thing, has ginned up the excitement nonetheless, deciding to now broadcast the event live over the Internet via video, rather than over a more typical audio link.

2:01 pm: Woah! Although I have been watching television since Richard Nixon was president, this video earnings call idea is pretty cool. Why has it not been done before? (It will be done again next week, as Netflix CEO Reed Hasting grabs his 15 minutes.)

Thus, as soon as the legal disclaimer was over, it was Mayer and CFO Ken Goldman sitting at a news desk, in a sort of “Good Afternoon, Yahoo!” situation.

Because it is not exactly pertinent to comment on how anyone looks, I decided to not do so — except to say that Goldman was sporting a very nice oxford shirt.

Mayer’s first words were delivered a bit stiffly, but she was doing okay pretty quickly on reading the prepared script and trying to make it seem fresh. In Silicon Valley, she is a well-known over-preparer and, clearly, she has done that here.

She showed off some slides about how the company is growing its page views, pointing to mobile growth as the key driver. That is in contrast to recent stats from comScore, which does not reflect the claimed mobile growth, but does tell a story of declining Web usage at some key Yahoo properties over the last year.

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Mayer then began to reel off the various accomplishments she has notched since she got to the troubled Internet giant last July.

From lots of acquisitions (mobile team up by a factor of six, she said) to better employee morale to attracting more entrepreneurial talent, Mayer called it a “super-charged Yahoo.”

Sounds like the company on muscle enhancers, which was her point, I think.

“As I hit my first-year anniversary, it is clear we are into our second sprint,” said Mayer, mixing the metaphors.

2:14 pm: Now it was over to Goldman, who apparently did not like to look at the red light on the camera, even if his life depended on it.

He reeled off a lot of numbers, noting that the balance sheet at Yahoo is strong, with $4.8 billion in cash and securities. A lot of what Goldman was going over had already been in the press release, but it was nice to see him actually read it off.

That is, until he got to the revenue slide for the company. It was not impressive in any way, showing a decided lack of growth all over the place.

Goldman said that Yahoo was trying to make a “meaningful” attempt to fix that. “We have a lot of confidence in our business, but that has yet to translate into revenue growth,” he also added, pointing out the very obvious.

He still looked a little pained, but seemed to rally with the search slide, even as he was trying to figure out a way to not insult the company’s partnership with Microsoft in the area.

Number of paid clicks was up nicely, 21 percent, although price per click was down eight percent.

Still, it was a whole lot better than display. “Our display business was challenged,” said Goldman, with another obviously obvious observation.

2:23 pm: For example: Price per ad was down, number of ads sold was down (“just two percent,” said Goldman, as if this could possibly be a good thing).

It looks like international revenue is part of the problem, down across the world. The Americas market was up.

Goldman continued on without any affect whatsoever, except for his pronounced New England accent, which is kind of what I want in a CFO.

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I will be honest: Goldman’s number-rattling soon started to wear on me, so I briefly considered switching over to watch “House of Cards” on Netflix. Kevin Spacey could make “non-GAAP operating income” seem exciting — of this, I am sure.

2:29 pm: It was soon back to Mayer, who was now going for a more serious tone and look. She showed off her “chain reaction of growth” slide again that is apparently a virtuous circle of fantastic (if it works, that is).

Then, she moved into the specifics.

She said she wanted Yahoo search to be better, but graded her mobile progress to be an “A.” Can you grade yourself? Yes, you can, if you are CEO with an exclusive earnings show on Yahoo Finance.

“Yahoo’s future is mobile,” she then said.

Then, quick as a wink, it was onto display, which has become the ugly ducking at Yahoo, downgraded from its former status as a swan.

“We have to do a much better job here,” said Mayer. Again: Obvi!

Onto video — Mayer really had a knack of keeping things moving — which she said was also important.

Blogging site Tumblr was also a highlight, she said, but was unspecific, except to throw in trendy phrases like “native ads.”

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2:34 pm: Finally, it was onto Q&A.

Suddenly, we have lost video! I am bereft as this is the heh-heh part of the show, where Wall Street analysts show just how tethered they are to the company execs’ good will and not investors’ best interests.

Wait, it’s back. Phew!

Mayer suddenly became much more interactive and comfortable onscreen, answering the first question about video looking a lot like a professional pundit.

(I was just noticing the giant Yahoo mug next to her, which riveted me for no good reason, except for its freakishly enormous size.)

The next question was on the guidance, which Yahoo had lowered earlier. The questioner wanted to know more, as well as how the company was going to monetize the next pile of money coming soon from Yahoo’s Alibaba Group asset with minimal tax impact.

Mayer noted that Tumblr, whose non-revenue will be non-included in the next quarter, will not matter to growth as yet. Non-revenue-producing companies bought for $1 billion usually do not.

Goldman then noted that he has the best tax minds looking into how to get that mountain of money from China to Yahoo without Uncle Sam getting too much of a taste.

The next questioner wanted some explanation about the depressing display fall off. Mayer said she was working on it. She clearly knew she cannot change the results and did not try to, although shaking her head in understanding did make it feel better.

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At this point, I decide that this video thing was genius, although I suspect there are very few CEOs who will be able to pull this off. It’s kind of like “Network,” but for geeks.

2:43 pm: Onto a question about Microsoft, as well as if there have been any benefits from Yahoo’s sales reorg under Henrique De Castro, who has got to be feeling the pressure due to the display disaster.

Goldman did not bite on Microsoft, which other Yahoos have done in the past. Mayer said the vertical set-up for advertising sales was better and “typical across industries.”

The next question was about M&A and its revenue potential. As most know, Yahoo has been on a tear in that department, buying 16 companies over the last year.

Mayer called them mostly “tuck-in acquisitions,” done for hiring talent more than anything else. Tumblr is, she noted, strategic, which is different.

She promised more of the small purchases, which means it was time to cue the cheering on Sand Hill Road among the VC set, who can now continue to bail out of some of their kookier investments.

Another question on new ad formats, which evoked not much of an answer by Mayer. But Goldman was now starting to feel good on video and noted that “we, as a team, are very, very focused on our original expectations for this year.”

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2:51 pm: The questions continued and I suddenly wished that we could see video of the Wall Street analysts, too. It be like a reality show — “Real Stockpickers of Wall Street.”

This reverie prevented me from paying mind to a question about some technical ad issue.

Finally, a good question came about breaking down the stats Mayer briefly showed off on page views. Let’s be clear, Mayer has been deft since she got to Yahoo about presenting the data that she wants rather than what others want and also what might be helpful to grokking what is happening inside Yahoo. Thus, no deets for anyone, except to say it’s all going up!

Then another decent query about whether Yahoo should be more deeply embedded with mobile leaders. Unlike Google and Apple, Yahoo does not have a smartphone platform or operating system, but Mayer said she had no partnerships to announce today.

Next, a content question about what maximizes the value of Yahoo. Mayer noted she was on the side of content partnerships, rather than Yahoo making its own original programming, a debate that has gone on at the company since the dawn of time.

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A video sales question. I was flagging here. Where is Kevin Spacey when you need him!?! Also, that Yahoo mug seems to have grown larger as the earnings cavalcade of details has continued. Could it have hurt to have a giant purple Yahoo exclamation point dance across the stage at this point?

Next, a question about Tumblr and the immersive search experience. Mayer, who is a search expert from her time as an exec at Google, went all wonk here, reeling off numbers. But changes to improve Yahoo’s declining business here is not baked yet, she concluded.

Mayer, who never lacks for aggressively cute gimmicks, finally closed by doing the Summly version of the Q2 report, as she had in a previous quarter. But, if truth be told, her hour-long show was much more entertaining.

“We hope you have enjoyed our video presentation,” said Mayer, delivering the line like a pro. Unfortunately, Goldman was not paying attention to the last cue, but quickly piped up, after a sharp sideways glance from his boss, like a digital update of Ed McMahon.

Hiyo, if you will, for the Internet age.


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— Phil Zimmerman, PGP inventor and Silent Circle co-founder, in an interview with Om Malik