By Ben Fox Rubin
Yahoo Inc.'s (YHOO) second-quarter income shrank 4.4% as the online media company saw restructuring charges weigh down its results, though contributions from its Asian assets continued to grow.
The ailing Internet portal managed a coup against a major rival when on Monday it named long-time Google Inc. (GOOG) Web-search executive Marissa Mayer as its new chief executive, looking to bring in someone with deep technology experience to help turn the company around. Mayer becomes the company's third permanent CEO within a year. Carol Bartz was removed in September and Scott Thompson resigned in May amid a controversy over his flubbed academic credentials.
The executive change creates renewed uncertainty over Yahoo's plans, as interim CEO Ross Levinsohn sought to refocus the company on online advertising, but he was overlooked for the permanent CEO spot.
Major challenges for Yahoo's turnaround persist, including its declining ad business and a sputtering search partnership with Microsoft Corp. (MSFT). But, Yahoo should receive a major influx of funds as it moves to sell half its 40% stake in Alibaba Group Holding Ltd. back to the Chinese e-commerce company after a tumultuous seven-year partnership.
In the latest quarter, Yahoo's core display-ad business reported 1.3% higher revenue after traffic-acquisition costs, which are commissions paid to partners. Search ad revenue improved 3.8% on the same basis.
Yahoo reported a profit of $226.6 million, down from $237 million a year earlier. On a per-share basis, earnings were flat at 18 cents, due to fewer shares outstanding. Earnings in equity interests, which are mainly composed of its investments in Alibaba and Yahoo Japan, rose 65% to $180 million. Excluding $129.1 million in restructuring charges and other adjustments in the latest quarter, per-share earnings were 27 cents. Wall Street was expecting a 23-cent profit, according to a poll by Thomson Reuters.
Total revenue slipped 0.9% to $1.22 billion, while revenue after traffic-acquisition costs improved 0.5% to $1.08 billion. The company's April guidance called for revenue after traffic-acquisition costs between $1.03 billion and $1.14 billion.
Operating margin shrank to 4.5% from 15.5%.
Shares closed Tuesday at $15.60 and were up 0.2% after hours. The stock is up 3.9% over the past three months.
Write to Ben Fox Rubin at firstname.lastname@example.org
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