26th Jan 12
Yahoo! chief vows to improve as profit drops
by Natasha Redman
Uncertain future: new CEO not telling what options are being considered
Uncertain future: new CEO not telling what options are being considered
Scott Thompson, the new chief executive of Yahoo!, attempted to manage expectations upon announcing his first set of figures, as the firm’s profit and sales dipped slightly during the fourth quarter.
The chief executive broadly addressed the many issues which the internet company is dealing with – from the possibility of selling it to reviving its display advertising business – but would not set out a detailed strategy during a call with analysts. Mr Thompson stuck to safe ground, stating that Yahoo! must improve its performance and get innovative products which matter into the market.
Tim Morse, Yahoo!’s chief financial officer, said talks with the company’s Asian partners – Softbank and Alibaba – about a restructuring were ongoing, but beyond that he gave little detail on the current situation. Mr Thompson, who only took up the role of CEO two weeks ago following the unexpected resignation of co-founder Jerry Yang, added that the firm’s board has reduced its options to the ones which appear the most promising.
Yahoo! revealed on Tuesday that its net profit and revenue fell slightly during the fourth quarter because it suffered year-on-year in both its display ad and search businesses. Gabelli & Company analyst Brett Harris said that their core display business is now becoming an issue. He explained that it takes the firm from growth to a melting ice cube, meaning it is a big deal.
The company’s net income was $296m (£189.5m) in the three months leading up to 31 December, in comparison with £312m in the same period the previous year. In the fourth quarter of last year, net revenue – which does not take into account fees which Yahoo! shares with its web partners – of around $1.17bn, was in comparison with $1.205bn in the same period last year. Shares in the company dropped by four cents to $15.65 in after-hours trading.
Mr Morse explained that macroeconomic factors, especially in Europe, led to weaker than anticipated display advertising revenue during the fourth quarter and remained a major concern. However, he said that Yahoo! was witnessing some positive trends so far this year, noting that a number of large advertisers which had reduced their ad spending with the company last year, had already pledged “meaningful upfronts” this year.
The company has projected that its first-quarter net revenue would be somewhere between $1.025bn and $1.105bn.
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