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Yahoo Q2 Earnings Miss, But Alibaba Shares Keep it Afloat

by Todd Haselton | July 15, 2014July 15, 2014 2:30 pm PST


Yahoo reported its second quarter earnings on Tuesday after the closing bell, noting an earnings per share of 37 cents on revenue of $1.04 billion, missing Wall Street expectations of 38 cents earnings per share on sales revenue of $1.08 billion. Revenue was flat compared to last year, when Yahoo reported earnings of $1.07 billion during the same quarter, and slightly down from the $1.08 billion it reported in Q1 of this year.

In the release, Yahoo said it is now required to sell a maximum of 140 million shares of Alibaba when the company goes public later this summer. Yahoo was originally required to sell 208 million shares, and while doing so will provide the company with extra cash — which shareholders are clamoring for in the form of dividends — it also leaves Yahoo with a sizable stake in a highly successful company. That’s likely why shares of Yahoo are trading higher after hours, despite the earnings miss.

“Our top priority is revenue growth and by that measure, we are not satisfied with our Q2 results,” CEO Marisa Mayer said. “While several areas showed strength, their growth was offset by declines. Yahoo Search, for example, had a strong quarter, growing 6% year-over-year on a revenue ex-TAC basis and 19% year-over-year in search click-driven revenue. Our social, mobile, video and native areas also grew with significant momentum, collectively gaining nearly 90% year-over-year. However, display remains an area of investment and transition. In Q2, we saw display revenue decline, further highlighting the fact that we need to work faster to ameliorate the negative trends. I believe we can and will do better moving forward,” said Yahoo CEO Marissa Mayer.

Shares of Yahoo closed the day down .25 percent but swung up about 2.3 percent in after-hours trading on the Alibaba news.

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Todd Haselton

Todd Haselton has been writing professionally since 2006 during his undergraduate days at Lehigh University. He started out as an intern with...