Yahoo! Inc. (NASDAQ:YHOO) reported its first quarter revenue results on Tuesday missing the analysts’ expectations as small growth in its online advertising segments was counterbalance by higher costs which Yahoo paid to advertisers for up surging of its advertising business.
In addition, Yahoo CEO stated that the firm had appointed advisers to decide the “most promising opportunities” for its stake in Yahoo Japan.
Yahoo plans to unload its 15 percent stake in Chinese e-commerce giant Alibaba Group Holding through a tax free spin off but didn’t show up with similar plans for its stake in Japan. Investors have been influencing CEO of Yahoo to sell the stake in Yahoo Japan.
Yahoo’s first quarter display advertising revenue bolstered 2.3 percent to $463.7 million, which makes up almost 40% of the total revenue. Search segment shoves Yahoo revenue account 19.5 percent to $531.7 million compared to previous year.
According to Yahoo, the recent deal of Yahoo with Mozilla’s popular Firefox browser to become the default search toolbar on its page spiked the search engine value. But the cost, not reveal by Yahoo, which Yahoo paid to Mozilla attributed to sharp rise of $137 million in traffic acquisition costs. The turnover of both display and search segments slumped after adding these costs.
“There is no turnaround,” said Pivotal Research Group analyst Brian Wieser. “There will be no turnaround other than that which they buy.”
Overall revenue of Yahoo toned down compared to its rivals Google Inc and Facebook Inc due to slow growth of its Web portal and email service.
Yahoo’s net income cut down to $21.2 million, or 2 cents per share in the Q1 of 2015, compared to $311.6 million, or 29 cents per share in the same period of the previous year.
Revenue, excluding fees paid to partner websites, dropped to $1.04 billion from $1.09 billion and also below the average estimates of $1.06 billion.
Yahoo CEO Mayer said on a conference call with analysts that yahoo didn’t plans to spin off its stake in Yahoo Japan along with divest of its stake in Alibaba Group, due to non-recommendation of advisers. The CEO further elaborated that it would later disclose its strategy for that stake.
