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Yahoo! Inc. Reports Ho-Hum Second Quarter; CEO Mayer Promises to "Do Better"

Yahoo! CEO Marissa Mayer. Source: Yahoo.

Yahoo! (NASDAQ: YHOO  ) just reported results for the second quarter of 2014. In after-hours trading, shares rose about 1% on the news.

Second-quarter revenue, excluding traffic acquisition costs, or TAC, decreased 3% year over year to $1.04 billion. Adjusted earnings increased 5% to $0.37 per diluted share.

Analysts were looking for earnings of $0.38 per share on $1.08 billion in sales. Yahoo! fell just a hair short of both targets.

Adjusted display-ad revenue decreased 7% year over year because of higher ad volumes but lower prices per ad. Search sales increased 6% ex-TAC, as both the number and the value of search ad clicks rose.

As part of the earnings release, Yahoo! also announced that the share repurchase agreement with Chinese Internet giant Alibaba has been amended. Yahoo! is now committed to sell 140 million Alibaba shares as part of that company's upcoming IPO, down from the original agreement of 208 million shares.

Moreover, Yahoo! promised to return "at least half of the after-tax IPO proceeds" to Yahoo! investors. Management did not commit to any particular mix of share buybacks and/or dividend payments to achieve this goal.

Yahoo~ CEO Marissa Mayer was not pleased with some of these results.

"Our top priority is revenue growth, and by that measure, we are not satisfied with our Q2 results," she said in a prepared statement. Search ads, social media, and mobile properties wre strong, but "display remains an area of investment and transition."

"I believe we can and will do better moving forward. Overall, I remain confident in Yahoo!'s future, our strategy, and our return to long-term growth," Mayer concluded.

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  • Report this Comment On July 15, 2014, at 5:26 PM, plange01 wrote:

    thats it for mayer!

  • Report this Comment On July 16, 2014, at 11:31 AM, jaxgab wrote:

    The market's fixation with growth instead of profits is logical and understandable.

    Company stocks like YHOO need to be punished because they display no sales growth even though they can routinely generate profits (over $ 1B per year for YHOO). Company stocks like AMZN that generate sales growth without meaningful profits need to be rewarded.

    Net Income 2009-2013

    YHOO/$ 8.2B

    AMZN/$ 2.9B

    EPS 2013

    YHOO/$ 1.26

    AMZN/$ .59


    YHOO/$ 35.61

    AMZN/$ 354.44

    Makes sense to me. Everyone should consider AMZN a buy and YHOO a sell.

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Anders Bylund

Anders Bylund is a Foolish Technology and Entertainment Specialist. Where the two markets intersect, you'll find his wheelhouse. He has been an official Fool since 2006 but a jester all his life.

Hypoallergenic. Contains six flavors not found in nature. Believes in coyotes and time as an abstract.

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