The bad news keeps on coming for Yahoo.
On the same day the company reached a shortlist for the sale of its troubled assets, the fallen tech giant once again missed its quarterly earnings predictions.
Revenue for the company’s second quarter was $1.31bn. Revenue, minus commissions paid to partners for web traffic, fell 19% in the second quarter, the sixth decline in the past seven periods.
Investors have demonstrated renewed optimism about the company’s stock as it seeks a buyer – the share price rose more than 13% this year so far. CEO Marissa Mayer is rumored to be on her way out, but the company has given no indication of when she will go or who will replace her.
Yahoo is reviewing a third and potentially final round of bids for its web properties that is expected to include Verizon Communications and private-equity firm TPG. Bidders have reportedly expressed concerns about Yahoo’s flagging fortunes. Once Silicon Valley’s pre-eminent online presence, it has fallen further and further behind Google parent Alphabet and Facebook.
The company announced it would fire 15% of its workforce in February as it tried to recoup money following a series of big-ticket purchases. Mayer could potentially walk away with a $137m payoff if she is fired.
“With the lowest cost structure and headcount in a decade, we continue to make solid progress against our 2016 plan,” said Mayer. “In addition to our efforts to improve the operating business, our board has made great progress on strategic alternatives. We are relentlessly focused on delivering shareholder value.”
Ahead of the results Ross Levinsohn, the company’s interim president whom Mayer beat out for the top job in 2012, was asked what he thought was the future held for his old company. He elected to quote Rocky III: “I think the prediction is pain,” Levinsohn said in a CNBC interview.
“The state is troubled, clearly,” Levinsohn said. “I think we can look back over the last four years and say the strategy did not pay off.”
Yahoo has pursued revenue growth along a number of avenues, none of them ultimately very lucrative and all of them advertising-based. The company tried to program high-end video like Netflix and Hulu but ended up with an anemic market share after years of changing tacks – at no point were its programs available on a TV except through an XBox gaming console – and last year it announced a $42m writedown on the cost of the programming itself.
From there, investors pressured the company to decide how to deal with its stake in Chinese e-tailer Alibaba, its most significant financial asset. Most of the company’s shareholders would prefer to have a stake in Alibaba alone, but Yahoo is still trying to find away to spin off its stake without a major tax burden.
Yahoo still engages a huge number of people: 228.2 million users visit the parent site alone, with an average time spent on the site per month of 12 hours. Its Yahoo Mail and Tumblr products have solid viewer figures, as well. But growth has eluded, and continues to elude, one of the first digital companies to become a household word.
This article was written by Sam Thielman in New York, for theguardian.com on Monday 18th July 2016 23.04 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010