Yahoo needs more than just an earnings beat, say analysts

Yahoo should admit missed opportunities: O'Leary

Despite an earnings beat, things still don't look so good for Yahoo—or CEO Marissa Mayer, industry experts said.

Read More Yahoo earnings easily beat Street, stock jumps 4%

"I look long-term at Yahoo as a place where money and companies go to die because that is what basically has happened over a long period of time," said Kevin O'Leary of O'Leary Funds, on CNBC's "Closing Bell" on Tuesday after the company reported its third-quarter earnings.

"Her challenge is to do something her predecessors have not been able to do. They missed search, it tried to get into video years ago and missed successfully. Most of the CEOs have lasted there a tenure of two or three years and then been whacked. I don't really see what she has done to add any value," he said.

EPS surprise history

Period EPS<br> Non-GAAP Estimate Surp (%) Price action<br> day after (%)
Q3 '14 E0.520.3264.8--
Q2 '140.370.38-1.4-5.1
Q1 '140.380.371.76.3
Q4 '130.460.3918.6-8.7
Q3 '130.340.332.3-0.9
Q2 '130.350.3014.810.3
Q1 '130.380.2552.8-0.4
Q4 '120.320.2815.0-3.0

While Yahoo posted earnings of 52 cents a share on revenue of $1.09 billion, beating expectations of 30 cents per share on $1.05 billion in revenue, analysts said they were still skeptical about Yahoo's ability to grow its core business.

"It looks like the basic business is a little better, but there's a lot of financial engineering here, they have a smart CFO, so we are going to see how the house is made whether it is made of bricks or straw," said Larry Haverty of Gabelli Funds on CNBC's Closing Bell.

"What's the real operating business doing? It doesn't look like it's growing the topline very much," he added.

Yahoo's core business of display and search advertising has struggled to compete against competitors like Facebook and Google. The company's value is largely attributed to its Alibaba holdings. Yahoo's core business is only worth about $5, perhaps even less, some analysts said. But some measures its core business is worth -$14.66 a share.

On the earnings call Mayer said that the company expects growth in display ads next year, and that mobile is already generating "meaningful revenue." Video is a part our key investment strategy, she added.

Yahoo shared details about its mobile business the first time this quarter. Mobile ads generated more than $200 million in sales on a GAAP basis, Mayer said.

Yahoo cut its workforce by 11 percent as "we've aggressively reduced our contract workers," Yahoo CFO Ken Goldman said.

He acknowledged that the company's "stock buybacks have been pretty aggressive," but he did not rule out the possibility of paying dividends from Alibaba share sales. "We never say never," Goldman said, but he added that share buybacks make more sense for shareholders.

But for Yahoo to have any sort of real turnaround success, the company needs to get a big makeover, O'Leary said.

"I think this needs a complete structural change, a complete change of direction. More along the lines of AOL where you start to return capital back to shareholders because the company has not had success doing it themselves," O'Leary said.

Read MoreWhat Wall Street really thinks Yahoo is worth

At least one analyst thought there might still be an Alibaba play in Yahoo stock. "With the Alibaba IPO behind Yahoo, there are only two reasons to want to own the stock, either Yahoo core shows improvement both organically and through acquisitions, or Alibaba continues to outperform expectations, driving BABA higher over time, and with it Yahoo stock, given Yahoo!'s remaining 15 percent ownership," said Youssef Squali, an analyst at Cantor Fitzgerald.

Yahoo's display business is down 6 percent year-over-year, and while its search business is up 6 percent year-over-year it still is growing at a much slower rate than the industry, Squali said.

Still, Squali has a price target of $43 with a 'buy' rating on the stock.