Yahoo revenue falls short of analysts’ estimates on ad sales
Yahoo Inc. reported sales on Tuesday that missed analysts’ estimates as marketers devoted online advertising spending to rival search websites.
Excluding revenue passed on to partner sites, Yahoo had sales of $1.13 billion, the Sunnyvale, Calif.-based company said. That compares with the average estimate of $1.16 billion among analysts surveyed by Bloomberg.
Yahoo is grappling with competition from companies such as Google Inc. and Facebook Inc., which have benefited from gains in market share and user growth. Visitor time spent on Yahoo fell to 2 hours and 11 minutes in June from 2 hours and 56 minutes in December, according to Nielsen Co. in New York.
“What they need are people staying up late, spending time on Yahoo,” said Heath Terry, an analyst at FBR Capital Markets Corp. in New York. “ “From all the numbers that we see, that’s just not happening.”
Yahoo shares rose 10 cents to $15.20.
Second-quarter net income attributable to Yahoo rose to $213.3 million, or 15 cents a share, from $141.4 million, or 10 cents, a year earlier.
The company forecast revenue of $1.57 billion to $1.65 billion for the current quarter, compared with the $1.64 billion estimate of Aaron Kessler, an analyst at ThinkEquity LLC in San Francisco.
U.S. online advertising is rebounding. The market should expand 11% this year after declining 3.4% last year, according to EMarketer Inc. in New York. Last week, Google reported a 24% increase in second-quarter revenue, which is derived mostly from online ads.
Yahoo is bringing new content to its site to attract visitors and keep pace with rivals. The company’s U.S. user base rose 10% in June from a year earlier, while Google’s climbed 14% and Facebook’s increased 84%, according to ComScore Inc. in Reston, Virginia.
In May, Yahoo said it would feature social games on its home page from Zynga Game Network Inc., whose properties include “FarmVille” and “ Mafia Wars.” Zynga has more than 235 million active users.
Yahoo also has a deal with Facebook, owner of the world’s largest social-networking service, to integrate more content on Yahoo’s sites. As part of the agreement, Yahoo unveiled a program last month that will let users see updates from Facebook friends on its home page and e-mail service.
Yahoo is investing in its own properties, using savings from its efforts to reduce expenses. The company is offloading the costs of running a search engine through a 10-year agreement with Microsoft Corp. Yahoo will use Microsoft’s Bing search product on its sites and sell ads next to the results. The companies expect to finish integrating those businesses by the end of the year.
That partnership will help the companies compete with industry leader Google, which had more than triple Yahoo’s U.S. market share of online searches last month, according to ComScore. Microsoft was third.
