- Stephen Lam/Reuters
Yahoo’s net revenue fell 8% in the third quarter, missing Wall street targets and underscoring its continuing struggles to revitalize its business.
The company said that it cut spending on its workforce and facilities during Q3 and that it will “narrow” its strategy and product focus going forward. Yahoo also forecast Q4 revenue that was well below Wall Street expectations.
Yahoo’s stock, which has risen about 19% over the past few weeks, slipped 1.7% in after-hours trading on Tuesday.
“As we move into 2016, we will work to narrow our strategy, focusing on fewer products with higher quality to achieve improved growth and profitability,” said CEO Marissa Mayer in a prepared statement with the quarterly results.
Mayer also noted that the company’s “top priority” is the planned spinoff of its remaining stake in Chinese ecommerce giant Alibaba Group. Yahoo also announced a partnership with Google, in which Google will provide search ads on Yahoo’s websites and share some of the revenue with Yahoo.
Here are some of the key numbers from Yahoo’s third quarter, ended September 30:
- Net Revenue, excluding TAC: $1 billion, down 8.3% year-on-year, versus analysts’ estimate of $1.02 billionNet income: $76 million, down from $6.8 billion in the year ago period (although those results included a $6.3 bilion gain from the sale of some of Yahoo’s Alibaba stake). Adjusted EPS: 15 cents versus analyst estimates of 16 cents. Q4 Revenue Guidance: $1.160 billion to $1.2 billion versus analyst estimates of $1.33 billion Q4 Net Revenue Guidance: $920 million to $960 million
Mayer is in her fourth year of an effort to revitalize the pioneering internet service, which has seen its advertising revenue and user engagement stall, while rivals such as Google and Facebook have thrived. Several of Yahoo’s top execs, handpicked by Mayer to lead the comeback effort, have jumped ship in recent months.
“This quarter we’ve reduced spending in areas such as workforce, facilities and discretionary expenses, and in our ongoing efforts to control expenses, we’ll continue to focus our headcount on growth initiatives,” CFO Ken Goldman said in a prepared statement.
Many investors are more interested in Yahoo’s 15% stake in Alibaba than in Yahoo itself. Yahoo plans to spin off the Alibaba shares into a separate company by the end of the year. But the IRS has refused to give its advanced blessing that the spinoff will be treated as a tax-free transaction.