Yahoo is scheduled to announce its third-quarter earnings after
the market closes Tuesday. Here's what you need to know:
EARNINGS FORECAST: Yahoo is expected to earn 30 cents a share,
according to the consensus of analysts surveyed by Thomson Reuters,
compared with 34 cents reported a year earlier. Yahoo missed
analysts' expectations in the second quarter by a penny.
REVENUE FORECAST: Analysts expect revenue, excluding commissions
paid to partners, of $1.04 billion, compared with $1.07 billion
reported the year earlier. The company gave a forecast of $1.02
billion to $1.06 billion. Yahoo's revenue has fallen in four out of
the past five quarters on weakness in display advertising. CEO
Marissa Mayer admitted then that Yahoo's transformation "will take
a little longer than we originally forecast."
WHAT TO WATCH:
--USE OF ALIBABA PROCEEDS: Yahoo took in $5.8 billion in cash,
after taxes, by selling part of its stake in Alibaba during the
Chinese company's IPO last month. Yahoo has said it plans to return
at least half of that cash to shareholders via a buyback or
dividend, and announced it would give an update on those plans when
it shares third-quarter earnings. What many shareholders are most
interested in--Yahoo's plan for avoiding taxes on its remaining
Asian assets--is unlikely to be discussed, because Yahoo is
restricted in discussing the matter by the terms of its agreement
with Alibaba.
--M&A STRATEGY: Chief Executive Mayer is expected to update
shareholders on her acquisitions strategy, which has brought in
more than three dozen small startups in two years and cost the
company more than $1.3 billion. Facing new pressure from activist
investor Starboard Value LP, Yahoo plans to focus less on smaller
deals while it considers acquiring one or more large tech startups
with some of its Alibaba proceeds, people briefed on those plans
told The Wall Street Journal.
--MOBILE ADS: Yahoo's mobile sites and apps have more than 430
million monthly users combined, and the company has made mobile ads
a bigger part of its pitch to marketers. This could be the first
quarter Yahoo breaks out how much revenue it's generating from
mobile, as Ms. Mayer seeks to assure investors that her strategy is
paying off.
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