Yahoo Core Revenue Drops Again
October 18 2016 - 4:57PM
Dow Jones News
By Deepa Seetharaman
Yahoo Inc. on Tuesday posted a 14% drop in its core revenue,
reflecting the continued deterioration of its advertising business
and raising more questions about the future of Verizon
Communications Inc.'s deal to buy Yahoo.
The revenue drop to $857.7 million, which excludes commissions
paid to partners for web traffic, marks the seventh decline in the
past eight periods for this key metric. Revenue from "Mavens" -- a
grouping Yahoo introduced to track mobile, video, native and social
ads -- rose 24% to $524 million.
Yahoo reported quarterly earnings of $162.8 million, or 17 cents
a share, and 20 cents a share excluding certain expenses. Analysts,
on average, expected the company to post adjusted earnings per
share of 14 cents, according to Thomson Reuters. A year ago, the
company posted adjusted earnings of 15 cents a share.
Shares of Yahoo rose 1.3% in after-hours trading.
Overall revenue rose 6.5% in the third quarter to $1.23 billion,
helped by a recent change in how the company reports revenue.
The earnings report comes as clouds gather around Verizon's $4.8
billion deal following Yahoo's disclosure last month of a data
breach affecting more than 500 million accounts, one of the largest
thefts of personal data to date. The internet company said
"state-sponsored" hackers penetrated its network in late 2014 and
stole personal data including names, dates of birth and encrypted
passwords.
Yahoo has said the breach was discovered after the merger deal
was signed in July.
Both sides are grappling with the fallout of the news. Last
week, Verizon's general counsel suggested the breach might allow
the company to renegotiate the deal's terms; Yahoo responded by
saying it was confident in its value. Analysts expect the deal will
go through but may require further concessions from Yahoo.
Yahoo decided to skip its third-quarter analysts' call because
of its sale to Verizon, allowing it to sidestep any thorny
questions about the deal and the data breach, as well as prospects
for its core business.
Yahoo CEO Marissa Mayer's attempt to focus the company on video
and search hasn't generated meaningful revenue growth.
Dissatisfaction in her performance prompted activist investor
Starboard Value LP to pressure the company into a sale.
Those weaknesses persist today, analysts say. Yahoo will command
1.8% of the world-wide digital ad revenue this year, down from 2.4%
in 2015, according to eMarketer. The data firm also believes
Yahoo's ad revenue will drop 10.2% in 2016 after a 3.5% decline
last year.
Write to Deepa Seetharaman at Deepa.Seetharaman@wsj.com
(END) Dow Jones Newswires
October 18, 2016 16:42 ET (20:42 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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