Yahoo's fourth quarter was a yawner, and while the earnings are certainly a nice increase from the torrent of charge-filled red ink during the same quarter a year ago, this company has a lot of explaining to do about where Yahoo goes from here.
On its face, the numbers were right in line with expectations, with 11 cents a share and $1.26 billion in revenue.
Trouble is, when rival Google reports strong growth in both categories just a week earlier, there was a sentiment on the Street that Yahoo needed to show better-than-expected results to show that it too was taking advantage of the turnaround in ad-spending online. That doesn’t seem to be the case.
Other metrics: Marketing services of $1.535 billion was better than $1.47 billion expected; same with Owned and Operated sites at $1.062 billion versus the $949 million expected. Affiliate sites hit $531 million, better than $514 million anticipated, and fees of over $212 million were stronger than than $193 million expected by analyst.
Looking ahead to the first quarter, Yahoo now offers a range of $1.575 billion to $1.675 billion. Street consensus was at $1.61 billion, so Yahoo's outlook again is essentially in line. The good news there though is that if Yahoo can meet those internal projections, it would represent the first year-over-year revenue increase more than a year's time.
Still, I say this was a yawner of a report because at a time when Yahoo needs to show a spark, and some investors hope for some kind of magic bullet that might accelerate revenue or even profits, there just doesn't appear to be any. Operationally, CEO Carol Bartz continues to cut costs and that is certainly helping the bottomline. But the revenue decline is disconcerting.
Incidentally, that 11 cents per share included 4 cents connected to the deal with Microsoft and restructuring, so back that out and you get 15 cents a share. But with Yahoo throwing in all charges in recent reports, 11 cents is firm as a comparison.
Meantime, internet display advertising on Yahoo's network sites grew 26 percent sequentially, but the comparison there is to a quarter in the throes of a far different macro-economic condition.
Search advertising rose 4 percent sequentially. That would be good if comScore didn't recently detail continued erosion in marketshare against gains by Google.
I guess if you're in this stock, you're in it for the turnaround that still seems to be a ways away. At some point, CEO Carol Bartz is going to have to stop talking about a turnaround, and actually do a turnaround. Yes, yes, it's a process. And Yahoo is a work in process, not quite yet a work in progress. Bartz is the first to tell you that these things take time, and that she's as impatient as anyone. And a stock going from $10 or $11 to $16 in a year's time is nothing to sneeze at. But how to sustain this and where the news sparks will come from are the key questions she'll continue to face, from the purple people-eaters in Sunnyvale, the sharks on the Street and the legions of investors probably wondering how long they'll have to wait.
How long investors are willing to wait? That's another story entirely.
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