Investor’s Get Disappointed After Seeing Yahoo! Inc. (NASDAQ:YHOO)’s Results

Posted by Lynn Eisler January 30, 2014 0 Comment 693 views

Yahoo Inc (NASDAQ:YHOO) reported disappointing earnings for the fourth quarter 2014. The revenue was 2% lower in a year over year basis but the adjusted earnings saw a rise. The adjusted earnings per share rose to $0.46 per share which was a rise of 31%. The significant decline in ad revenue by as much as 6% decline in display ad revenue could not be balanced despite the 3% increase in the number of ads served.

CEO Marissa Mayer said in the earnings call that the company was focused on revenue but the results were yet to be seen.

Pros & Cons

Yahoo!’s top line is suffering since a long time now, and the fact that not much changed for the company in the year 2013 is not an encouraging sign. Other than the one time impact that was seen post the selling of some of Alibaba’s assets nothing major happened at the top line.

The bottom line has made some progress but the margins are too small for investors to take note of it. The net quarterly income was 18% higher as compared to the quarter of 2011, sufficient data is not available for the comparisons to the fourth quarter of 2012 as the sales of Alibaba had an immense impact.

Alibaba is not the savior anymore!

Alibaba is a key part of Yahoo! Inc. and its story now. Investors were keeping a close eye for indications of progress. Yahoo! Inc. has 24% stake in the company and it reported a 51% growth in revenue in a year over year period to around $1.78 billion which is in fact more than what yahoo made in the same period. However the declining growth of Alibaba is also apparent and it doesn’t really promise good things for the company in the coming time.

Looking at the time ahead, expected earnings are slotted at $1.16 billion and per share worth of $1.12 for Q1 in 2014. This is a much weaker projection than what was expected. In terms of EPS the guidance projection stands at a high end of $0.16 which is well below what consensus estimates predicted at $0.41. Overall the future looks bleak for Yahoo! Inc as its set to see more declines in the core businesses and investors are also keenly observing this fact.

About Lynn Eisler

Lynn Eisler is a national news reporter focusing on economic issues, data analysis and the financial health of state and local governments. Lynn has been honored with the H.L. Mencken Award for Investigative Reporting, the Champion of Justice Award for reporting on the drug war, and the John Hancock Award for business reporting. Lynn was also a Knight Medical School Fellow at the University of Michigan.

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