Internet information provider Yahoo! (YHOO) will bring in innovative newer products in 2012 that will help users and advertisers besides aligning important areas of concentration for an aggressive push in market place. The new chief executive officer Scott Thomson has set his priorities clear after the company's fourth quarter profit slipped 5 percent, yet matched analysts' expectations. But revenues fell shy of estimations causes concern. However, the company guided first quarter revenues within the analysts' expectations that will not alter stock movement greatly either way.
This is 13th consecutive quarters for the company to witness a fall in revenues indicating advertisers shift towards social networking sites such as Facebook, Twitter and market leader Google (GOOG). Strangely, the result is not a disappointing one compared to Google's, whose earnings and revenues for the fourth quarter had a wider gap with analysts' estimations.
Given the Google's performance, it was feared that Yahoo! results too might get hampered by worldwide economic uncertainty. Though the company's revenues slipped, it has got nothing to do with global situation since its revenue has been continuously on the losing streak. This is quite evident from the fact that its Europe, Middle East and Africa region recorded revenues, excluding TAC, of $109.68 million, up 3.8 percent from $105.64 million in the year earlier quarter. In fact, this was only region where the company could register revenue growth, while it had lost revenues in its own backyard, the U.S.
But the company did indicate that global weakness, especially European Union, affected its display ad sales during the fourth quarter.
Q4 Results
The Sunnyvale, California-based Yahoo! reported net earnings of $296 million, down 5 percent from $312 million in the year-ago quarter and earnings remained flat at 24 cents a share.
While GAAP revenues dropped 13 percent to $1.32 billion from $1.53 billion, revenues, excluding traffic acquisition costs, skid 3 percent to $1.17 billion from $1.21 billion in the previous year quarter.
Wall Street analysts were estimating the company to report earnings of 24 cents a share on revenues of $1.19 billion.
Income from operations grew 10 percent to $242.45 million from $219.98 million in the year earlier quarter.
Outlook
Moving ahead, Yahoo! believes that innovative newer products apart from aligning its resources in key focus areas would allow them for an aggressive push in the market place for the benefit of users and advertisers.
The company guided first quarter revenues, excluding TAC, to be between $1.065 billion and $1.105 billion and GAAP revenues to be $1.17 billion - $1.26 billion. Street analysts' are predicting the company to generate revenues of $1.08 billion.
Versus Google
Last week, Google reported net income of $2.71 billion, up 6.7 percent from $2.54 billion and earnings rose 5.3 percent to $8.22 per share from $7.81 per share in the year-ago quarter. Adjusted net income also increased 9.8 percent to $3.13 billion from $2.85 billion and earnings grew 8.6 percent to $9.50 a share from $8.75 a share in the year earlier quarter.
Total revenues increased 25.4 percent to $10.58 billion from $8.44 billion, while revenues, excluding traffic acquisition costs, advanced 18.4 percent to $8.13 billion from $6.4 billion in the previous year quarter. But earnings and revenues came below street analysts estimation of $10.49 a share on revenues of $8.41 billion.
Our Take
The results of Yahoo! is not disappointing and came in on the expected lines. But the new CEO needs to take some hard decisions, especially with regard to sale of some of its assets to arrest the fall in revenues first and then bring back the company to growth. The stock will not have much of a movement in the near term in the absence of any clear catalyst from the new CEO.
