Yahoo Inc forecast a modest uptick in revenue for the current year as it revamps its family of websites but Chief Executive Marissa Mayer warned it would be a long journey to revive the Internet company’s fortunes.<\/p>\n
In Yahoo’s first financial outlook since Mayer became CEO in July, the company outlined a plan to trigger a “chain reaction of growth” by overhauling a dozen of its online services to increase the amount of time users spent on its websites.<\/p>\n
It also pointed to strength in its search advertising business and progress made in improving its internal operations.<\/p>\n
Yahoo’s shares were 3 percent higher in after hours trade after the revenue projection was disclosed during an analysts conference call, shedding some ground after earlier rising as much as 4.5 percent.<\/p>\n
But weakness in Yahoo’s display ad business, which accounts for roughly 40 percent of the company’s total revenue, caught some analysts by surprise.<\/p>\n
“While the road to growth is certain, it will not be immediate,” said Mayer, a former Google Inc executive and Yahoo’s third full-time CEO since September 2011.<\/p>\n
Yahoo said that revenue, excluding fees it pays to partner websites, will range between $4.5 billion and $4.6 billion in 2013, implying an annual growth rate of 0.7 percent to 3 percent.<\/p>\n
Finance Chief Ken Goldman also warned investors to expect “an investment phase” in the first half of the year, which he said would impact profit margins.<\/p>\n
“What was clear from the call is that this is a long-term turnaround story,” said Macquarie Research analyst Ben Schachter. “We shouldn’t expect anything to just snap back and correct itself.”<\/p>\n
During the fourth quarter, Yahoo’s net revenue increased 4 percent year-on-year to $1.22 billion, as search advertising sales offset a 10 percent decline in the number of display ads sold on Yahoo’s core properties.<\/p>\n
Mayer said the decline was the result of less activity by visitors to its popular websites, such as its Web email service, and to a lesser extent due to users accessing the Web on smartphones, where Yahoo’s ad business is not as strong.<\/p>\n
Efforts to revamp its mobile properties, begun last year with a redesign of the photo-sharing service Flickr, remain on track, said Mayer, noting that Yahoo now has 200 million monthly mobile users.<\/p>\n
“From a monetization perspective this is still a very nascent source of revenue for us. With any platform shift, revenue always followed users and mobile will be no different,” she said.<\/p>\n
Mayer took over after a tumultuous period at Yahoo in which former CEO Scott Thompson resigned after less than 6 months on the job over a controversy about his academic credentials and in which Yahoo co-founder Jerry Yang resigned from the board and cut his ties with the company.<\/p>\n
Yahoo’s stock has risen roughly 30 percent since Mayer took the helm, reaching its highest levels since 2008.<\/p>\n
Part of the stock’s rise has been driven by significant stock buybacks, using proceeds from a $7.6 billion deal to sell half of its 40 percent stake in Chinese Internet company Alibaba Group, said Sameet Sinha, an analyst with B. Riley Caris.<\/p>\n
Yahoo said it repurchased $1.5 billion worth of shares during the fourth quarter.<\/p>\n
The company’s fourth-quarter net income was $272.3 million, or 23 cents per share, versus $295.6 million, or 24 cents per share in the year-ago period.<\/p>\n
Excluding certain items, Yahoo said it had earnings per share of 32 cents, versus the average analyst expectation of 28 cents according to Thomson Reuters I\/B\/E\/S.<\/p>\n
For the first quarter, Yahoo said it expects revenue, excluding partner website fees, of $1.07 billion to $1.1 billion, trailing the $1.1 billion that Wall Street analysts expect on average.<\/p>\n
Shares of Yahoo were up 59 cents at $20.90 in after-hours trading on Monday.<\/p>\n
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