Yahoo: Q3 earnings

Summary of Yahoo's earnings for its third quarter, following which shares were up 2% immediately after results in post-market trading (9.10pm London time).

 

Revenue

Earnings per share

Expected

$1.05 billion $0.30

Actual

$1.09 billion $0.52

 

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The company made 52 cents per share on revenue of $1.099 billion, compared to expectations of 30 cents and $1.05 billion respectively. Meanwhile the firm now sits on $12 billion in cash, from $5 billion at the end of 2013.

The core business is still moving along reasonably well but many investors wonder where further growth will come from. Against Facebook and Google Yahoo finds itself outmatched at almost every turn, with much of the value of the company still coming from its remaining stake in Alibaba.

It is true that mobile sales are on the increase, with more than $200 million made in the quarter, but outside of this the company needs a more radical strategy. One activist investor has called for the firm to merge with AOL, while others are arguing that Yahoo’s board should accept that their ability to grow the business in any substantial fashion is limited. Instead, they suggest, an increased payout to shareholders would be a sensible course, giving investors greater return without the need to fritter away cash on unnecessary acquisitions.

The shares have rallied 13% since the lows last week, but while they are now challenging the 2014 highs it may be difficult for them to maintain upward progress. A drop back from the highs around $44.20 could see the shares test the 200-day moving average once again, with possible support beyond this around $33.15.

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