Yahoo trims 2013 sales outlook as CEO Mayer's effort falters

Yahoo chief executive Marissa Mayer speaks during a news conference in New York. Yahoo trimmed its outlook for 2013 revenue on Tuesday after reporting ongoing reductions in display advertising sales volume and prices in the second quarter, signs that
Yahoo chief executive Marissa Mayer speaks during a news conference in New York. Yahoo trimmed its outlook for 2013 revenue on Tuesday after reporting ongoing reductions in display advertising sales volume and prices in the second quarter, signs that Ms Mayer's attempts to revive the struggling Internet giant may not produce quick results. -- FILE PHOTO: AP

SAN FRANCISCO (REUTERS) - Yahoo Inc trimmed its outlook for 2013 revenue on Tuesday after reporting ongoing reductions in display advertising sales volume and prices in the second quarter, signs that chief executive Marissa Mayer's attempts to revive the struggling Internet giant may not produce quick results.

The company is now forecasting revenue of US$4.45 billion (S$5.62 billion) to US$4.55 billion this year, down from US$4.5 billion to US$4.6 billion previously. Yahoo also reported that second-quarter net revenue was down slightly at US$1.071 billion, though it posted adjusted profit that was ahead of Wall Street targets.

"If there is some kind of genius happening here, it needs to start materialising later this year, and taking your guidance down is not a step in that direction," BGC analyst Colin Gillis said. "We have had eight quarters of decline for the number of display ads sold. And the price per ad dropped significantly this quarter - that's huge."

On Tuesday, it reported a 12 per cent slide in price-per-ad in the second quarter from a year earlier, outstripping the first quarter's 2-per cent decline.

Analysts said advertising exchanges, which help get ads on spots on various Internet websites, are putting pressure on prices, especially for premium advertising.

"This is just the beginning of the trend, of the drop in the price per ad. You still have a pretty big gap between what you can get direct and what you can get selling on an exchange," Mr Gillis said.

Shares of Yahoo, which have gained about 70 per cent since Ms Mayer took the helm a year ago, were down 2 per cent at US$26.30 in after-hours trading on Tuesday.

"They had guided to basically expect some sort of growth in the second half of the year. Now that thing is coming down, and you never know, you might end up the year just being flat in terms of revenue," Mr Sameet Sinha, analyst at B Riley & Co, on the full year net revenue guidance.

Yahoo's net revenue, which excludes fees paid to partner websites, was US$1.071 billion in the second quarter, within its forecast of US$1.06 billion to US$1.09 billion, but below the US$1.081 billion it posted in the second quarter of 2012.

Yahoo said it earned 35 US cents per share, excluding certain items in the second quarter, compared with 30 US cents in the year-ago period. Analysts polled by Thomson Financial I/B/E/S were looking for 35 US cents in adjusted EPS.

Revenue from Yahoo's display advertising business in the second quarter fell 11 per cent from the year before on an adjusted basis, while search advertising revenue was up 5 per cent on an adjusted basis.