Yahoo Q2 profit dives 64%, revenue falls 15%

19 Jul 2016

Yahoo Inc today reported a 64-per cent fall in its second quarter (April-June 2016) operating profit and a 15-per cent fall in revenue, after excluding accounting adjustments.

Yahoo said it earned nine cents a share in its second quarter, down from 16 cents a year ago. Revenue was up, though, to $1.3 billion.

Revenue was up at $1.3 billion, up from $1.24 billion in the same quarter a year ago, after the Silicon Valley internet giant said it sold more than $200 million of real estate (which you cannot sell again).

Although Yahoo revenues actually declined 15 per cent, changes in presentation made revenue look better.

Search revenue was down 24 per cent from the comparable quarter last year. Revenue from display ads was also down to $470 million for the quarter, a seven per cent drop.

The internet portal giant, which has been struggling with losses in the face of stiff competition, has received final bids for its core services of search, email, advertising and media operations.

If the board rejects all the offers, Yahoo would presumably go forward with a previous plan to spin off its operating businesses into a separate company, leaving its huge investments in Alibaba and Yahoo Japan in the old company.

Yahoo today also acknowledged the serious erosion to its business and net worth - Tumblr, its biggest acquisition under its current chief executive, Marissa Mayer - was now worth only one-third of the $1.1 billion that Yahoo paid for it in 2013.

Investors are now focused on whether Yahoo's web, email, news and other businesses will finally be sold, and at what price.

Mayer, in a webcast with investors to discuss results, however, did not say anything about the potential sale. She noted that the company had made ''great progress'' on the strategic review process but offered no timeline for a decision.

Yahoo's board is expected to evaluate the final bids received for its assets over the next two weeks and decide whether to proceed with a transaction that would end Yahoo's 20-year run as an independent, publicly traded company.

The bidders for Yahoo's operations include Verizon Communications and AT&T, several private equity firms and a Quicken Loans co-founder, Dan Gilbert, who is getting financial backing from Warren E. Buffett's company, Berkshire Hathaway. Verizon would probably merge Yahoo's internet business with AOL, another onetime online giant, which it owns.

Yahoo's internet business shrunk to such levels that it will get about 1.5 per cent of the world's digital ad revenue this year, down from 2.1 per cent last year. By contrast, Google is expected to command 30.9 per cent of the market and Facebook is expected to garner 12 per cent.

Analysts expect the final bids to come in at $3.5 billion to $6 billion, including Yahoo's land and patents.