Yahoo meets quarter earning targets, remains mum on CEO hunt

Struggling Web giant manages to hit Wall Street's low-end earning expectations; gives little update on potential bidders or search for new CEO.
Written by Jamie Yap, Contributor

Yahoo has met lackluster third-quarter earnings targets set by Wall Street, but the struggling Internet giant remains tight-lipped about its possible takeover and its search for a new chief executive.

The company's profit and revenue slipped year-on-year during the third quarter, with weak sales in its online display ads and search advertising business, Reuters reported Tuesday. Its net earnings of US$293 million, or 23 cents a share, reflected a drop from US$396 million, or 29 cents per share, clocked in same quarter last year. Yahoo's net revenue, which excludes fees paid to partner Web sites, reached US$1.07 billion, falling slightly from US$1.12 billion last year but in line with Wall Street expectations.

"It looks okay, nothing spectacular, but nothing disastrous and nothing disastrous is good news for these guys," Macquarie Research analyst, Ben Schachter told Reuters.

The current state of Yahoo's business is practically irrelevant to most investors, added Oppenheimer & Co analyst Jason Helfstein in the report. "Most people who own this own it for a takeout; they're not owning because they believe in the fundamental story. So long as the core business is not deteriorating and presumably growing somewhat, that pays you for your patience," Helfstein said.

Associated Press on Monday also reported that another lackluster quarter might not be viewed negatively by many investors because Yahoo would now be seen as a likely takeover target. The company might be more receptive to bidders if it looked unable to revive its revenue growth--and lift its stock price--on its own, it said.

Yahoo CFO and interim-CEO, Tim Morse, said in a statement: "We're pleased that revenue, operating income and EPS (earnings per share) were all above consensus this quarter. My focus, and that of the whole company, is to move the business forward with new technology, partnerships, products and premium personalized content--all with an eye toward growing monetization."

Reuters noted that Morse, however, did not provide an update about the company's strategic review. Speaking to analysts and reporters in a confernce call, the Yahoo CFO said the board would do so when it had something to announce. "That will take time. It will not be today and not on this call."

Morse was similarly tight-lipped about the progress of the CEO search, except for comments that "the board process was underway".

Yahoo fired its CEO Carol Bartz last month. Since then, reports--as well as rumors--had swirled on Yahoo's plans for an eventual buyout, with big tech names including Chinese e-commerce giant Alibaba and U.S. software bellwether Microsoft identified as potential bidders.

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