Yahoo Fails To Impress With Q3 Earnings

Marissa Mayer at Yahoo

Yahoo reported quarterly revenue and profit’s on Tuesday and they fell below analyst estimates.

Shares were down in extended trading as Marissa Mayer failed to prove that her plans for the company are generating the desired results.

The company during the report announced that it had signed a search deal with Google Inc. Google will pay Yahoo a percentage of revenue from ads displayed on Yahoo sites and get fees for requests for image or Web search results.

The company reported a net profit of $76.3 million at 8 cents per share. Yahoo reported a profit of $6.77 billion one year prior, or $6.70 a share.¬†Last year’s profit included proceeds of $6.3 billion, net of tax, from the sale shares in Alibaba Group Holding Ltd.

Excluding items, shares earned 15 cents on an estimate of 17 cents a share.

The company also announced that traffic acquisition costs quadrupled to $223 million, up from $54 million one year prior. That means Yahoo is spending a lot more money to attract customers to its platform.

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Revenue, after deducting fees paid to partner websites, fell to $1.0 billion from $1.09 billion. GAAP revenue fell 6.8 percent to $1.23 billion, below the average analyst estimate of $1.26 billion.

During the earnings call Mayer failed to talk about the company’s proposed spinoff of its 15% stake in Chinese e-commerce company Alibaba Group Holding Ltd.

Many analysts have found very little value to Yahoo’s core business without its Asian assets.