Yahoo Share Price: Company’s Q3 Sales Forecast Misses Expectations

on Jul 17, 2013
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iNVEZZ.com, Wednesday, July 17: Yahoo Inc (NASDAQ:YHOO), the biggest US web portal, yesterday posted a rise in profit that beat market estimates but its sales forecast for the current quarter came short of analysts’ expectations.

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The Yahoo share price yesterday closed in New York 1.7 percent down at $26.88. In extended trading, it rose one percent to $27.11, after falling as much as 3.2 percent to $26.01. The stock has gained more than 70 percent since Marissa Mayer took over as CEO a year ago and launched an ambitious turnaround plan.
**Sales forecast**
Sales, excluding revenue passed to partner cites, will be $1.06 to $1.10 billion in the current quarter, which trails the average analysts’ forecast of $1.12 billion compiled by Bloomberg. Second-quarter revenue came in at $1.07, also below the 1.08-billion analysts’ estimate.

The weaker-than-expected sales outlook is yet another indication that Mayer’s plan seeks to accomplish long-term goals rather than provide an immediate boost to the company’s performance.
“Marissa’s investments in product are a long-term play to drive user engagement and hopefully revenue growth,” said Paul Sweeney from Bloomberg Industries. “Judging by the company’s guidance, these investments clearly will have little to no near-term benefit.”

Investors expecting revenue growth would have to be patient, he opined.
The company, however, reported non-GAAP net earnings of 35 cents a share for the second quarter, beating the average expectations on Wall Street of 30 cents.
“I’m encouraged by Yahoo!’s performance in the second quarter. Our business saw continued stability, and we launched more products than ever before, introducing a significant new product almost every week,” Mayer said in a statement published on Yahoo’s website. She highlighted various improvements in the company’s product line made during the quarter and pointed out that users had responded with increased usage and engagement.

**Alibaba**
According to Mark Mahaney, an analyst at RBC Capital Markets in San Francisco, the majority of Yahoo’s gains in the past year have been driven by the appreciation of the company’s stakes in Alibaba Group Holding Ltd. and Yahoo Japan Corp. Alibaba Group, the China-based online marketplace in which Yahoo has a 24-percent stake, more than tripled its net income in the first quarter of 2013 to $669 million from $220 million in the year-ago quarter.

The US Web giant made $225 million in earnings last quarter from its equity interest in Alibaba and Yahoo Japan, a significant increase from $180 million a year earlier.
**Yahoo’s display ad market share will fall, researchers say**
!m[Q2 Net Earnings Beat Estimates](/uploads/story/4071/thumbs/pic1_inline.png)
Yahoo once was the dominant force in the US market for display ads but those days seem long gone. Market researcher EMarketer Inc has forecast that the company’s share in the $17.5 billion market will fall to 7.9 percent in 2013 from 9.2 percent last year. In contrast, Google Inc’s (NASDAQ:GOOG) market share will increase by nearly three percentage points to 18 percent, while Facebook (NASDAQ:FB) will add about two percentage points to 17 percent, EMarketer has estimated.
The second quarter saw a 12 percent decline in Yahoo’s sales of display ads to $472 million, in part due to advertisers paying lower prices per promotion, as marketers shift away from buying the large-format graphic ads that Yahoo specialises in, according to BGC Partners LP’s analyst Colin Gillis.
**The Yahoo share price (pre-market) was $26.96 as of 12:26 GMT, 17.07.2013**

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