Yahoo takes hit, revenue drop overshadows profit rise

In this Jan. 22, 2014, file photo, Yahoo CEO Marissa Mayer smiles during a session at the World Economic Forum in Davos, Switzerland. Yahoo on Tuesday, Jan. 28, reported that its quarterly profit jumped at the end of last year, but revenues sank in a troubling sign for the struggling Internet pioneer. AP

SAN FRANCISCO—Yahoo on Tuesday reported that its quarterly profit jumped at the end of last year, but revenues sank in a troubling sign for the struggling Internet pioneer.

The California firm reported profit up 28 percent to $348 million in the fourth quarter on revenue that slid six percent to $1.27 billion from the same period a year earlier.

Yahoo shares dropped more 4.4 percent to $36.56 in after-market trades.

“I’m encouraged by Yahoo’s performance in the fourth quarter and 2013 overall,” chief executive Marissa Mayer said in the earnings release.

“We are extremely heartened by the year-over-year traffic increase we experienced in 2013, an early sign of return on our investments and the acquisitions we’ve made.”

Former Google executive Mayer took the Yahoo helm in mid-2012 and has been striving to revitalize and reinvent the once-leading online search engine vanquished by the company she left behind.

Investors were troubled by a six percent drop during the fourth quarter in display ad revenue that has long been at the core of Yahoo’s income.

Display ad revenue in the quarter was $491 million compared to $520 million taken in during the final three months of the previous year, according to the earnings release.

For the full year 2013, Yahoo posted a profit of $1.4 billion, which was down from 2012 when the company took in big sums from sales of its stake in China’s Alibaba.

But revenue for the full year dropped six percent to $4.68 billion.

Jon Ogg at 24/7 Wall Street said that while the drop in revenues is a concern, Yahoo is also subject to profit-taking after the huge rally over the past year, amid concerns about how far Mayer can take the company forward.

“Many may criticize the lack of revenue growth seen so far. That may be an issue, but the reality is that this stock is up huge and investors seem to have decided to take money off the table here for now,” Ogg said.

Leading social network Facebook last year bumped Yahoo from its spot as the No. 2 digital ad seller in the United States for the first time, according to industry tracker eMarketer.

Yahoo’s share of US digital ad revenue slid to 5.8 percent last year from 6.8 percent in 2012, eMarketer reported.

Facebook’s share grew to 7.4 percent from 5.9 percent in a year-over-year comparison, according to eMarketer. Google dominated with 39.9 percent of US digital ad revenue.

Yahoo’s share of worldwide digital ad revenue ebbed to 2.87 percent last year from 3.37 percent in 2012, according to eMarketer

But Yahoo continues to hold a crown it claimed in August of last year after edging past Google in a comScore ranking of online properties most frequently visited from desktop computers in the United States.

Figures from the industry tracker last week showed that Yahoo websites logged just shy of 195.2 million unique visitors in December while second-place Google saw about 192.3 million unique visitors.—Glenn Chapman