SAN FRANCISCO (Reuters) - Yahoo Inc YHOO.O posted revenue in the second quarter that fell short of Wall Street estimates as Internet advertisers spent less than the company expected, and shares fell more than 7 percent.
Yahoo finance chief Tim Morse told Reuters on Tuesday that the company experienced “big customer weakness” among its display advertisers in the United States toward the end of June, with some pushing orders back until July.
“It has definitely made us incrementally a little bit more cautious,” Morse said.
On a conference call on Tuesday, Chief Executive Carol Bartz said that the company’s experience with spending on display ads in the first three weeks of July indicates that “we’re back to normal.”
Yahoo said its revenue in the three months ending June 30 rose to $1.60 billion from $1.57 billion in the year-earlier period.
But Yahoo’s net revenue, which excludes revenue it shares with website partners, was $1.13 billion — below the average analyst expectation of $1.16 billion, according to Thomson Reuters I/B/E/S.
Yahoo’s search business declined 8 percent year-over-year, with Morse noting that the company did not see as much of “a pickup in monetizable” searches as it had expected.
Yahoo said net income in the second quarter rose to $213.3 million, or 15 cents a share, from $141.4 million, or 10 cents a share in the year-earlier period. That was a penny above analysts’ average forecast of EPS of 14 cents.
Yahoo forecast a revenue range between $1.57 billion and $1.65 billion in the third quarter. Morse said he expected the traffic acquisition costs in the third quarter to range between 29 percent and 29.5 percent of revenue.
Shares of Yahoo had gained 8 percent since the start of the month, but are down 21 percent from their 52-week high of $19.12.
Shares of Yahoo were down 7.2 percent to $14.10 after closing at $15.20 on Nasdaq on Tuesday.
Reporting by Alexei Oreskovic; Editing by Gary Hill and Carol Bishopric