(Corrects display revenue number to $409 million from $453
million, in 10th paragraph)
By Alexei Oreskovic
SAN FRANCISCO, April 15 Yahoo Inc again
posted anemic quarterly revenue growth as the Internet company's
advertising business continues to lag its rivals, nearly two
years into Chief Executive Officer Marissa Mayer's comeback
Mayer told analysts on Tuesday that new mobile and
advertising initiatives were gaining momentum, positioning the
company for a period of stable but modest growth. Revenue from
its core display advertising business inched 2 percent higher in
the first quarter, reversing several consecutive quarters of
But the company forecast second-quarter revenue, excluding
fees paid to partner websites, of $1.06 billion to $1.1 billion.
That suggests revenue could decline by as much as 1 percent or
rise by up to 2.7 percent from $1.07 billion a year earlier,
underscoring the challenges facing its business.
That did not faze Wall Street, which is focused primarily on
Yahoo's 24 percent stake in Alibaba Group Holding Ltd
IPO-ALIB.N, the Chinese e-commerce giant that is expected to
go public later this year.
Yahoo's shares climbed 7 percent on strong results from
"It's really Alibaba driving things," said Macquarie
Research analyst Ben Schachter. Yahoo's core business improved
slightly in the first quarter, but "really the story here is
Alibaba and the somewhat unexpected re-acceleration" of its
The Chinese company's revenue increased 66 percent to $3.06
billion in the fourth quarter, according to slides that Yahoo
posted on its investor relations website on Tuesday, faster than
the 51 percent growth in Alibaba's third quarter.
Yahoo reports the Chinese company's financial results one
quarter later than its own.
CHEAPER ADS PROLIFERATE
Mayer is trying to revitalize Yahoo's business. The former
Google Inc executive revamped many of Yahoo's Web
products but its ad sales business continues to struggle while
rivals such as Google, Facebook Inc and Twitter Inc
continue to post strong, double-digit revenue growth.
Revenue from display ads, which accounts for roughly 40
percent of Yahoo's overall sales, increased just 2 percent to
$409 million, excluding partner fees. That meager growth follows
several consecutive quarters of decline in the display ad
Yahoo said it was making progress in developing new mobile
technology, online video, social media and new ad formats. The
company now counts 430 million monthly users of its mobile
products, while the number of online video streams consumers
watched increased 30 percent from the fourth quarter.
Finance chief Ken Goldman said that so-called "stream ads"
that appear in-between scrolling news headlines on Yahoo's Web
pages now account for about a fifth of the number of display ads
that the company serves. He noted that stream ads were priced
lower, weighing on the company's total average price per display
ad, which declined 5 percent.
Goldman did not provide any update on how Yahoo might use
the proceeds from the Alibaba IPO, during which Yahoo is
required to sell 40 percent of its stake in the company.
Alibaba, valued at more than $140 billion, is expected to go
public later this year in the United States in the largest IPO
since Facebook's debut in 2012.
Yahoo's revenue, excluding fees paid to partner websites,
came to $1.087 billion in the first quarter, up from $1.074
billion in the year-ago period. Analysts polled by Thomson
Reuters I/B/E/S had expected adjusted revenue of $1.077 billion.
It had net income of $311.6 million, or 29 cents a share, in
the first quarter. It earned 38 cents a share excluding certain
(Reporting by Alexei Oreskovic; Editing by Alden Bentley and