Yahoo's profit, revenue miss Street forecasts as costs rise

Tue Apr 21, 2015 6:59pm EDT
 
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By Bill Rigby and Lehar Maan

(Reuters) - Yahoo Inc missed Wall Street's revenue and profit forecasts as slight growth in its online advertising businesses was outweighed by higher payments to partners and websites which send readers to Yahoo.

But Yahoo shares rose about 1.4 percent to $45.10 in extended trading after Chief Executive Marissa Mayer said the company had hired advisers to determine the "most promising opportunities" for its stake in Yahoo Japan.

Investors have been urging Mayer to cash in the stake, after Yahoo announced plans to spin off its position in Chinese internet retailer Alibaba Group Holding.

The moves follow unsuccessful efforts by Mayer to revive meaningful revenue growth with a string of acquisitions and product revamps.

For the first quarter, Yahoo said display advertising revenue rose 2.3 percent to $463.7 million, accounting for roughly 40 percent of its total revenue. Search business revenue was up 19.5 percent year-on-year to $531.7 million.

Yahoo said its recent deal to become the default search engine on Mozilla's popular Firefox browser boosted search volume. But the cost of the deal, which Yahoo did not disclose, contributed to a sharp $137 million rise in traffic acquisition costs. Both display and search revenue fell after factoring in those 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 growth has stalled in recent years as Yahoo's once-hot Web portal and email service have lagged those of rivals such as Google Inc and Facebook Inc.   Continued...

 
A Yahoo logo is pictured in front of a building in Rolle, 30 km (19 miles) east of Geneva, in this file picture taken December 12, 2012.     REUTERS/Denis Balibouse