Yahoo revenue down 13 percent in Q4, CEO says better execution needed

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Yahoo‘s revenue dropped 13 percent compared to the same period last year, the company reported today. In its quarterly earnings’ announcement Tuesday, Yahoo reported $1,324 million in GAAP revenue for the fourth quarter of 2011, while costs increased by 10 percent. Excluding traffic acquisition costs from Yahoo’s partnership with Microsoft and others, the company brought in $1,169 million — down just three percent compared to last year.

The numbers aren’t very surprising as Yahoo continues to lose ground in online advertising to Google and Facebook. The company’s search engine also recently dropped in popularity to third, behind Bing and search-leader Google. The company’s revenues have declined consecutively over the past three years, including the 24 percent drop for third quarter 2011.

Meanwhile, the overall U.S. online advertising market grew 23.5 percent to $9.2 billion in Q4 2011 compared to last year, according to eMarketer. The analyst firm also estimates that Yahoo’s share of overall U.S. online ad market revenues declined to 11 percent last year, down from 13.3 percent in 2010.

Over the past year, the company has also had its share of management turbulence. In September, Yahoo’s board of directors fired CEO Carol Bartz after she failed to push the company forward. Earlier this month, the board named former PayPal President Scott Thompson as the new CEO — a move that investors hope will help stabilize the company and give it some much needed direction. And last week, Yahoo founder Jerry Yang announced his resignation from the board.

“We need better execution and better monetization of user engagement,” Thompson said during the quarterly earnings call. “In 2012 we will be aligning resources behind key areas of focus to enable us to move aggressively in market and grow our business, bringing innovative new products and experiences to both our users and advertisers.”

Thompson said the company needs to prioritize its efforts in not only in the areas of media consumption and advertising, but also the company’s collection data, which he calls one of the company’s “single-most underrated, under appreciated, and underused assets.”

For the first quarter of 2012, the company expects revenue (excluding traffic acquisition costs) to range between $1,025 million and $1,105 million.

Here are some of the highlights from the earnings release:

  • Revenue excluding traffic acquisition costs was $1,169 million, down 3 percent from the fourth quarter in 2010, which was $1,205 million.
  • GAAP Revenue was $1,324 million, down 13 percent from $1,525 million in Q4 of 2010.
  • Income from operations was $242 million, up 10 percent from $220 million compared to the same quarter last year.
  • Net earnings were $296 million, down five percent from $312 million in Q4 2010.
  • Net earnings per diluted share stayed flat at .24 cents compared to Q4 2010.
  • Display revenue excluding traffic acquisition costs was $546 million, a 4 percent decrease compared to $567 million for the fourth quarter of 2010.
  • GAAP display revenue was $612 million, a 4 percent decrease compared to $635 million for the fourth quarter of 2010.
  • Search revenue excluding traffic acquisition costs was $376 million, a 3 percent decrease compared to $388 million for the fourth quarter of 2010.
  • GAAP search revenue was $465 million, a 27 percent decrease compared to $640 million for the fourth quarter of 2010.