It doesn’t matter how many rabbits Marissa Mayer pulls out of her hat, the once internet legend that is Yahoo just can’t seem to turn its fortunes around.
The beleaguered company missed Wall Street’s Q1 revenue and profit forecasts, with a trivial increase in its advertising business being demolished by higher payments to the partners that send readers Yahoo’s way.
Yahoo posted adjusted earnings of 15 cents a share, with sales excluding traffic acquisition costs of $1.04bn. Analysts had predicted $1.06 billion. Shares fell by 2% after the results were posted but recovered slightly when Mayer told analysts that the company had hired advisors to determine the "most promising opportunities" for its stake in Yahoo Japan.
The Sunnyvale, Calif-based company revealed that the recent deal to become the default search engine on Mozilla’s Firefox browser had a positive impact on search traffic but the cost of the deal negated any meaningful impact on the figures.
Once a gateway to the World Wide Web, it now seems like Yahoo’s destiny lies somewhere between Netscape and MySpace; however, it has a couple more aces up its sleeve that will release some of the pressure. Yahoo plans to divest its 15% stake in China’s behemoth eCommerce site, Alibabaa, in a tax free spin off. The shares are worth in the region of $40bn.
Activist hedge fund Starboard Value is also urging Yahoo to spin-off the Japanese division of the business, thought to be worth $8bn.
But Pivotal Research Group analyst Brian Wieser summarised the situation with a rather gloomy prognosis: "There is no turnaround. There will be no turnaround other than that which they buy."