Yahoo just announced its earnings, but the biggest news is that it will spin its stake in Alibaba out into a separate company.
The stock is up about 8% after hours as investors digest the news of the tax-free spinoff of Yahoo's biggest and most important asset.
Earnings were more or less right on target with analysts' expectations:
- Non-GAAP EPS of $0.30 vs. analysts expectations of $0.29. Last quarter Yahoo blew analysts' expectations away -- not so this time.
- Revenue (minus traffic acquisition costs) of $1.18 billion, slightly less than analysts' expectations of $1.19 billion.
- Display revenue (minus TAC) was down 5% from last year, coming in at $464 million.
- Search revenue (minus TAC) was flat from last year, at $462 million. However, gross search revenue was up 14%, so Mayer's efforts to revamp search at least seem to be drawing more advertising dollars than before.
Overall, a very lackluster quarter, but investors seem happy with the Alibaba news.
Revenue at Yahoo has basically been declining since 2009, this quarter did nothing to reverse that slide. In fact, the fourth quarter is usually Yahoo's biggest, but it dropped slightly from last year.
Now that Alibaba is public and that chapter of Yahoo's history is basically closed, why should investors buy Yahoo today? Mayer hasn't given a convincing explanation yet, and the company's performance remains flat in its core businesses, but she has another chance to explain today.
We'll be updating this post as we hear more on Yahoo's earnings call, which starts around 5 pm ET. Click here to refresh for the latest.
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