(Corrects consensus estimate for earnings per share in
paragraph 15 to 30 cents, from 35 cents. Error first appeared in
By Alexei Oreskovic
SAN FRANCISCO, July 16 Yahoo Inc
trimmed its outlook for 2013 revenue after revealing a sharp 12
percent slide in ad prices in the second quarter, signs that CEO
Marissa Mayer's attempts to revive the struggling Internet giant
may not produce quick results.
The company is now forecasting revenue of $4.45 billion to
$4.55 billion this year, down from $4.5 billion to $4.6 billion
previously. Yahoo also reported that second-quarter net revenue
was down slightly at $1.071 billion, though it posted adjusted
profit that was ahead of Wall Street targets.
Yahoo, in a novel post-results livestream akin to a TV
newscast with Mayer and CFO Ken Goldman playing news anchors,
acknowledged the pressure on prices but stressed that Yahoo was
developing new ad formats and technology that would reverse the
"We can do better in display, and this is going to be a
clear focus for the business," a relaxed Mayer said onscreen,
referring to Yahoo's display advertising business.
On Tuesday, the company reported a 12 percent slide in
price-per-ad in the second quarter from a year earlier,
outstripping the first quarter's 2 percent decline.
Analysts said advertising exchanges, which help get ads on
spots on various Internet websites, are putting pressure on
prices, especially for premium advertising.
"If there is some kind of genius happening here, it needs to
start materializing later this year, and taking your guidance
down is not a step in that direction," BGC analyst Colin Gillis
said. "We have had eight quarters of decline for the number of
display ads sold. And the price per ad dropped significantly
this quarter - that's huge."
"This is just the beginning of the trend, of the drop in the
price per ad. You still have a pretty big gap between what you
can get direct and what you can get selling on an exchange,"
The stock rebounded after an initial 2 percent to 3 percent
slide, trading 1.1 percent higher at $27.19 after the company
disclosed better-than-expected results from China's Alibaba, the
Internet giant of which Yahoo owns 24 percent.
Shares of Yahoo have gained about 70 percent since Mayer
took over a year ago, in large part due to share buybacks that
stem from its slice of Alibaba, which is preparing to go public
in what could be the largest debut from a Chinese Internet
On Tuesday, Yahoo clarified that it planned to repurchase an
additional $1.9 billion of its stock, part of a previously
announced $5 billion buyback plan. During the past several
quarters, Yahoo has repurchased $3.65 billion of its shares
using proceeds from the sale of part of its stake in Alibaba
Yahoo also shared details of Alibaba's first-quarter
performance. The company founded by English schoolteacher Jack
Ma increased revenue 71 percent to $1.4 billion in the quarter
and almost tripled net income, to $669 million.
As for Yahoo itself, net revenue, which excludes fees paid
to partner websites, was $1.071 billion in the second quarter,
within its forecast of $1.06 billion to $1.09 billion, but below
the $1.081 billion it posted in the second quarter of 2012.
Revenue from its display advertising business in the second
quarter fell 11 percent from the year before on an adjusted
basis, while search advertising revenue was up 5 percent on an
Yahoo said it earned 35 cents per share, excluding certain
items in the second quarter, compared with 30 cents in the
year-ago period. Analysts polled by Thomson Financial I/B/E/S
were looking for 30 cents in adjusted earnings per share.
"They had guided to basically expect some sort of growth in
the second half of the year," said Sameet Sinha, analyst at B.
Riley & Co, on the full year net-revenue guidance. "Now that
thing is coming down, and you never know, you might end up the
year just being flat in terms of revenue."
(Reporting by Alexei Oreskovic; Editing by Gunna Dickson and