Yahoo Expects Revenue Growth In 2013

Yahoo Inc looks quiet determined in increase in revenue for the current year as it revamps its family of websites.

But Chief Executive Marissa Mayer warned it would be a long journey to revive the Internet company’s fortunes.

Yahoo’s first financial outlook since Mayer became CEO in July, the company outlined a plan to trigger a “chain reaction of growth” by overhauling a dozen of its online services to increase the amount of time users spent on its websites.

It also point out to strength in its search engine & adsense business and progress made in improving its internal operations.

Yahoo’s shares were 3 % up in after hours trade after the revenue projection was disclosed during an analysts conference call, shedding some ground after earlier rising as much as 4.5 %.

But weakness is Yahoo’s ad business, which accounts for hardly 40 % of the company’s total revenue.

“While the road to growth is certain, it will not be immediate,” said Mayer, a former Google Inc executive and Yahoo’s third full-time CEO since September 2011.

Yahoo said that revenue, excluding fees it pays to partner websites, will range around $4.5-$4.6 billion in 2013, implying an annual growth rate of 0.7 % to 3 %.

Finance Chief Ken Goldman also warned investors to expect “an investment phase” in the first half of the year, which he said would impact profit margins.

“What was clear from the call is that this is a long-term turnaround story,” said Macquarie Research analyst Ben Schachter.

“We shouldn’t expect anything to just snap back and correct itself.” During the fourth quarter, last year, Yahoo’s net revenue increased 4 % to $1.22 billion, as search advertising sales sets a 10 % decline in the number of display ads sold on Yahoo’s core properties.

Mayer added that the decline was the result of less activity by visitors to its popular websites, such as its Web email service, and to a lesser extent due to users accessing the Web on smartphones, where Yahoo’s ad business is not as strong as to its main web.

“Efforts to revamp its mobile properties, begun last year with a redesign of the photo-sharing service Flickr, remain on track,” said Mayer, “Yahoo now has 200 million monthly mobile users,” he added.

“From a monetization perspective this is still a very nascent source of revenue for us. With any platform shift, revenue always followed users and mobile will be no different,” he said.

Mayer signed as a CEO of the company after a horror period at Yahoo in which former CEO Scott Thompson resigned after less than 6 months on the job over a controversy about his academic credentials and in which Yahoo co-founder Jerry Yang resigned from the board and cut his ties with the company.

Yahoo’s stock has risen roughly 30 % since Mayer took the work in his hands, reaching its highest levels since 2008.

“Part of the stock’s rise has been driven by significant stock buybacks, using proceeds from a $7.6 billion deal to sell half of its 40 % stake in Chinese Internet company Alibaba Group,” said Sameet Sinha, an analyst with B. Riley Caris.

Yahoo said it repurchased $1.5 billion worth of shares during the fourth quarter. The company’s fourth-quarter net income was $272.3 million, or 23 cents per share, versus $295.6 million, or 24 cents per share in the year-ago period.

Excluding certain items, Yahoo said it had earnings per share of 32 cents, versus the average analyst expectation of 28 cents according to Thomson.

Yahoo’s shares were up by 59 cents at $20.90 in after-hours trading on Monday.

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