SAN FRANCISCO — © 2013
Yahoo’s first-quarter earnings beat analysts’ expectations Tuesday, even as revenue was stagnant, in Marissa Mayer’s third earnings report as chief executive.
Yahoo reported that net income in the first quarter rose 36 percent to $390 million, or 35 cents a share, from the year-ago quarter. Wall Street analysts had expected net income of 24 cents a share.
The company said, however, that revenue was $1.14 billion, down 7 percent from the year-ago quarter. Excluding traffic acquisition costs, revenue was flat at $1.07 billion.
Yahoo’s stock was down about 4 percent in after-hours trading.
Yahoo, once the biggest seller of display ads, lost that position to Facebook and Google in 2011. In the first quarter, Yahoo’s display advertising business fell 11 percent, to $455 million, compared with the same quarter a year ago.
“We saw continued stability in our business, strengthened our team, and started the year with fast execution against our products and partnerships,” Mayer said in the company’s news release. “I’m confident that the improvements we’re making to our products will set up the company for long-term growth.”
Yahoo’s fourth-quarter earnings arrived at a critical juncture for Mayer, who joined the company nine months ago.
Since then her presence seems to have jolted the company’s stock back to life. Yahoo’s stock is up more than 50 percent since July, and closed at $23.79 Tuesday.
Now, however, investors are eager to see whether she can deliver revenue growth.
The company’s search business, which Yahoo outsourced to Microsoft in 2009, is on its last legs, propped up only because of a revenue-guarantee clause in its contract with Microsoft.
Mayer coaxed a surprisingly strong search performance in the holiday season, but it’s unclear whether she will be able to continue to grow that business without a complete overhaul of its search partnership with Microsoft.
As Mayer has acknowledged, Yahoo’s future growth may well depend on its mobile strategy. Without its own mobile hardware, browser or social platform, Yahoo has a long way to go in mobile.
In its earnings release, Yahoo noted that it had recently revamped its home page to make it more mobile-friendly and that three of its recent startup acquisitions – Snip.it, Alike and Jybe – would help accelerate efforts “to build world-class technology and engineering teams in mobile and personalization.”