SAN FRANCISCO • Yahoo Inc's quarterly earnings fell short of Wall Street expectations in what may be the company's last financial report before it sells its core business.
Yahoo on Monday reported adjusted earnings of 9 US cent per share, short of the 10 US cents that analysts expected. It also announced a US$482 million (S$652 million) write-down on the value of Tumblr, the social media service it bought in 2013 for US$1.1 billion.
The company posted a net loss of US$439.9 million, or 46 US cents per share, compared with a loss of US$21.6 million, or 2 US cent per share, a year earlier. "If search continues to decline as much as it has that's something that's going to be called into question," said JMP Securities analyst Ronald Josey.
Revenue in the company's emerging businesses, which chief executive Marissa Mayer calls Mavens - mobile, video, native and social advertising - showed some life, rising 25.7 per cent to US$504 million in the second quarter ended June 30.
But investors were not focused on the quarterly numbers or Yahoo's vast overpayment for Tumblr. They were far more interested in whether Yahoo's Web, e-mail, news and other businesses will finally be sold - and at what price.
Yahoo is in the process of auctioning off its search and advertising business and is expected to choose a winner this week.
Ms Mayer had little to say about the potential sale in a webcast with investors to discuss the results. She noted that the company had made "great progress" on the strategic review process but offered no timeline for a decision.
Yahoo has been holding a prolonged auction for those assets since February, and final bids were due on Monday. The board is expected to evaluate the offers over the next week or two and decide whether to proceed with a transaction that would end Yahoo's 20-year run as an independent, publicly traded company. The bidders include Verizon Communications and AT&T, several private equity firms and Quicken Loans co-founder Dan Gilbert, who is getting financial backing from billionaire investor Warren Buffett's company, Berkshire Hathaway.
Yahoo's flailing business will make it hard for it to get top dollar. Research firm eMarketer has said Yahoo will get about 1.5 per cent of global digital ad revenue this year, down from 2.1 per cent last year.
By comparison, Google is expected to command 30.9 per cent of the market and Facebook is expected to garner 12 per cent. Analysts expect the final bids to come in at US$3.5 billion to US$6 billion.
NEW YORK TIMES, REUTERS