Yahoo earnings preview

Yahoo reports for its second-quarter tomorrow after the US stock market closes, a year to the day since Marissa Mayer was named as CEO.

Yahoo's share price has headed upwards quite consistently in the year since Marissa Mayer took over as Chief Executive Officer. The Silicon Valley golden girl has added some much-needed stability to the company, which went through four different CEOs in the preceding two years (her predecessor lasted just a few months in the hot seat, before stepping down in a scandal over his qualifications).

In the twelve months since Ms Mayer took over, she has reportedly boosted company morale and has hit the headlines with a number of high-profile acquisitions, including a billion-dollar deal for microblogging site Tumblr. Ironically, Yahoo’s share-price growth can largely be attributed to its stake in Alibaba, a vast e-commerce business based in China that is rumoured to be on the verge of announcing a huge IPO. Yahoo acquired a large stake in Alibaba back in 2005, long before Marissa Mayer’s arrival.

The company has yet to address one of its key problems, however, which is how to turn around its decreasing share of the display ads market. Once top of the pile in this area (as recently as 2010 in fact), Yahoo has since been surpassed by rivals Google and Facebook. Much of Yahoo’s revenues come from this one area, and the decline is therefore hurting its overall revenues.

It will be interesting to see if any of the new acquisitions will allow Yahoo to diversify its revenue stream, therefore. I will be particularly interested to hear if the company has been able to grow revenue from mobile ads. Facebook and Google have both worked out how to leverage revenue from their mobile users and we have yet to see evidence that Yahoo can successfully monetise its mobile ads in a similar way.

According to a survey of analysts conducted by Thomson Reuters, the consensus of expectation is for earnings of $0.30 per share from revenue of $1.08 billion. This compares with earnings for the same quarter in 2012 of $0.27 per share on revenue of $1.2 billion.

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