Yahoo's profit, revenue miss estimates; weighs options for Japan stake

[NEW YORK] Yahoo Inc missed Wall Street's revenue and profit forecasts as slight growth in its online advertising businesses was outweighed by higher payments to partners and websites which send readers to Yahoo.

But Yahoo shares rose about 1.4 per cent to US$45.10 in extended trading after Chief Executive Marissa Mayer said the company had hired advisers to determine the "most promising opportunities" for its stake in Yahoo Japan.

Investors have been urging Ms Mayer to cash in the stake, after Yahoo announced plans to spin off its position in Chinese internet retailer Alibaba Group Holding.

The moves follow unsuccessful efforts by Mayer to revive meaningful revenue growth with a string of acquisitions and product revamps.

For the first quarter, Yahoo said display advertising revenue rose 2.3 per cent to US$463.7 million, accounting for roughly 40 per cent of its total revenue. Search business revenue was up 19.5 per cent year-on-year to US$531.7 million.

Yahoo said its recent deal to become the default search engine on Mozilla's popular Firefox browser boosted search volume. But the cost of the deal, which Yahoo did not disclose, contributed to a sharp US$137 million rise in traffic acquisition costs. Both display and search revenue fell after factoring in those costs. "There is no turnaround," said Pivotal Research Group analyst Brian Wieser. "There will be no turnaround other than that which they buy." Overall revenue growth has stalled in recent years as Yahoo's once-hot Web portal and email service have lagged those of rivals such as Google Inc and Facebook Inc.

Net income attributable to Yahoo fell to US$21.2 million, or 2 cents per share, for the quarter ended March 31, from US$311.6 million, or 29 cents per share, a year earlier.

On an adjusted basis, earnings were 15 cents per share.

Revenue, after deducting fees paid to partner websites, fell to US$1.04 billion from US$1.09 billion.

Analysts on average had expected a profit of 18 cents per share on revenue of US$1.06 billion, according to Thomson Reuters I/B/E/S.

The company plans to spin off its 15 per cent stake in China's Alibaba Group Holding Ltd, responding to pressure to hand over to shareholders its prized e-commerce investment valued at roughly US$40 billion.

Yahoo CEO Mayer said on a call with analysts that its advisers had recommended that Yahoo does not include its valuable stake in Yahoo Japan in that spin-off. She said Yahoo would reveal its plans for that stake at a later date.

REUTERS