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Yahoo posts loss, revenue falls slightly
- — 28 January, 2009 11:20
Yahoo recorded a loss and its revenue shrunk a bit in the fourth quarter, ended Dec. 31, 2008, the struggling Internet company said Tuesday.
Its new CEO, Carol Bartz, appointed two weeks ago, acknowledged in a conference call that the company has problems, but expressed optimism about its future. "I've encountered a wonderful energy, a real can-do attitude, a robust product pipeline and a tremendous dedication to making the experience of our users and advertisers the best they can possibly be," she said.
"To be sure, there are also fundamental issues that need to be addressed: sharpening our strategic focus, improving the pace of decision-making and continuing to streamline the business," she added. "I intend to move quickly to tackle these core issues and capitalize on all the incredible opportunities that exist at Yahoo."
Revenue was US$1.81 billion, a 1 percent decrease compared to 2007's fourth quarter. Subtracting the commissions it pays to its ad network partners, Yahoo had revenue of $1.37 billion, down 2 percent but in line with the consensus estimate from analysts polled by Thomson Reuters.
Yahoo posted a net loss of $303 million, or $0.22 per share, compared to net income of $206 million, or $0.15 per share, in 2007's fourth quarter.
On a pro forma basis, which excludes certain items, net income was $238 million, or $0.17 per share, $0.04 per share above the analysts' consensus expectation.
The fourth-quarter results have generated particular interest because they are the first ones after Bartz took over. Bartz replaced Jerry Yang, who announced his intention to step down in November after his tenure as CEO, begun in mid-2007, failed to turn around the company he founded. He stayed on as Chief Yahoo and as a board member.
Bartz said she didn't arrive at Yahoo with preconceived ideas about what needs to be done, and that she's still learning about the company "and working my way through that thought process."
She tackled directly the issue of selling all or part of the company. "Did I come to Yahoo to sell the company? The answer is 'no,'" she said.
Regarding selling Yahoo's search business to Microsoft or any other such deal, she said all options are on the table, but that she doesn't believe Yahoo should be picked apart, because it has great assets and opportunities.
Whether Yahoo keeps it or sells it, the search business in particular is extremely important for the company, and strengthening it is a priority, she said.
One thing she has already realized is that Yahoo is organizationally very complex. That needs to change, she said.
"We need to bring more clarity to our strategy, feed innovation, be maniacally focused on our users and their experience, and always remember that great products will bring users and advertisers to Yahoo," she said.
CFO Blake Jorgensen said that Yahoo had implemented a variety of previously announced cost-cutting measures in the fourth quarter, including about 1,600 layoffs and consolidation of facilities. He doesn't expect Yahoo to roll out a massive cost-cutting plan in 2009, but said the company will continue looking for opportunities to sharpen its operational efficiency. Yahoo ended the fourth quarter with 13,600 employees, down from 15,200 at the end of the third quarter.
For the full 2008 year, revenue was $7.21 billion, up 3 percent compared to 2007. Subtracting commissions to ad partners, revenue was $5.40 billion, up 6 percent.
Net income for 2008 was $424 million, or $0.29 per share, compared to $660 million, or $0.47 per share, for 2007. Pro forma net income was $642 million, or $0.46 per share, compared to $652 million, or $0.46 per share, for 2007.
For 2009's first quarter, Yahoo expects revenue between $1.52 billion and $1.72 billion, and operating cash flow between $365 million and $415 million.
Bartz was hired away from Autodesk, where she was executive board chairman after serving as chairman, president and CEO for 14 years, until April 2006.
The day Bartz's appointment was announced, Yahoo President Sue Decker, who had been a candidate for the CEO position, resigned, saying she will leave after a transitional period. Decker worked at Yahoo for eight-and-a-half years and was a close supporter of Yang.
Yang's tenure included an unsolicited acquisition attempt by Microsoft, and critics blamed the failure of that deal on Yang and the Yahoo board. Later, a deal to let Yahoo run Google search ads collapsed after it became clear the U.S. government planned to challenge it due to antitrust concerns. The deal would have given Yahoo's revenue a significant boost.
Yang's tenure as CEO also featured two big rounds of layoffs, an embarrassing exodus of high-profile managers, disappointing financial results, a tanking stock price, free-falling employee morale and little or no advances in key areas, like search usage and search advertising.
Yahoo has been in crisis for several years, during which its financial performance has been generally disappointing and its technology strategy largely unfocused, allowing rivals big and small to take advantage of hot Internet opportunities while Yahoo reacted slowly, if at all.