Yahoo tops estimates as CEO outlines growth plan
Yahoo! Inc. reported fourth-quarter revenue that topped analysts' estimates and increased annual sales for the first time since 2008 as the largest U.S. Web portal benefited from buoyant demand for online search.
Fourth-quarter earnings, excluding some items, were 32 cents a share, Yahoo said in a statement. Sales, excluding revenue passed to partner sites, rose 4 percent $1.22 billion. Analysts on average had projected profit of 28 cents on revenue of $1.21 billion, according to data compiled by Bloomberg.
Chief executive officer Marissa Mayer, speaking on a call Monday, said she expects to build on last quarter's gains by getting users to spend more time on a dozen popular sites, including mail and Yahoo Finance. Still, forecasts for this quarter and the full year that fell short of analysts' predictions underscore the challenge Mayer faces in display advertising, an area where Yahoo lags behind Google Inc. and Facebook Inc.
"She's not pounding Madison Avenue and saying, 'Hey, advertise with us,' she's saying, 'Let me take time to build a great product and then, when we prove we can get the eyeballs, then you can advertise with us,'" Sameet Sinha, an analyst at B Riley & Co., said in an interview.
It was the most substantial discussion of Mayer's strategy since she was hired in July, and could help convince investors that renewed focus on product innovation will eventually help drive Yahoo's sales growth, said Sinha, who is based in San Francisco and rates Yahoo shares a buy.
Through Monday, the stock had gained 2.1 percent this year. Yahoo released results after the U.S. market close.
Adjusted profit excludes costs associated with closing Yahoo's Korea business, as well as restructuring charges.
"Our fourth quarter benefited from user interface improvements on mobile, very strong sales execution as well as favorable macroeconomic and seasonal trends," Mayer told analysts Monday on a conference call.
First-quarter revenue excluding the portion passed to partners will be $1.07 billion to $1.10 billion, shy of the $1.12 billion projected by analysts. Sales on that basis for 2013 will be $4.5 billion to $4.6 billion, compared with analysts' $4.59 billion estimate.
Net income attributable to Yahoo fell 7.9 percent to $272.3 million, or 23 cents a share, Yahoo said.