Yahoo CEO Marissa Mayer delivers her keynote address at the annual Consumer Electronics Show (CES) in Las Vegas, Nevada January 7, 2014.Reuters
Yahoo Inc. chief executive officer Marissa Mayer has a message for investors: We hear you.
In a conference call following the Web portal's third-quarter earnings results, Ms. Mayer worked to soothe shareholder fears over the company's turnaround, its acquisition strategy and how it was handling valuable stakes in Asian companies, as well as cash.
The CEO detailed how Yahoo has bought back 24 per cent of shares since late 2012, how the company's deal-making has been "meaningful," talked up mobile opportunities and said the Web portal has been focused on cost efficiencies.
"I have great confidence in the strength of our business," Ms. Mayer said on the call, adding that she was "proud" of how the company has performed. "Our focus is on sustainable market-share gaining growth."
The comments amount to a defence of the CEO's strategy as Ms. Mayer faces pressure from activist investor Starboard Value LP. Last month, Starboard questioned Ms. Mayer's leadership and called for a breakup of the Sunnyvale, Calif.-based company, in order to unlock more shareholder value. Starboard also asked that Yahoo cease from more deal-making and cut costs. At the time, Ms. Mayer said she would elaborate on plans in today's earnings call.
Starboard didn't immediately respond to a request for comment.
The CEO made her remarks after reporting third-quarter sales that topped estimates. Revenue, excluding sales shared with partner websites, was $1.09-billion (U.S.) for the period, the company said. That was up 1.5 per cent from a year earlier and topped analysts' average estimate of $1.05-billion, according to data compiled by Bloomberg. For the current quarter, Yahoo forecast revenue of $1.14-billion to $1.18-billion, compared with analysts' average estimate of $1.17-billion.
"To have 1-per-cent growth be better than expected says something about Yahoo at the moment," said Ben Schachter, an analyst at Macquarie Securities USA Inc. "It's good to see the right trajectory, but it doesn't change the story dramatically."
Yahoo shares rose as much as 4.8 per cent in extended trading, after closing at $40.17 in New York. The stock is down less than 1 per cent this year, compared with a 5-per-cent gain in the Standard & Poor's 500 Index.
For the third quarter, profit, excluding items such as stock-based compensation, was 52 cents a share. Analysts had projected 30 cents a share. Net income attributable to Yahoo was $6.77-billion, up from $296.7-million a year earlier.
The company got a one-time boost of more than $9-billion before taxes last month from a sale of part of a stake it owns in Chinese e-commerce company Alibaba Group Holding Ltd., which still makes up more than half of Yahoo's valuation. Yahoo said today it's paying about $3.3-billion of taxes related to the share sale. The Web portal retains a stake of about 15 per cent in Alibaba.
Yahoo also accelerated share repurchases over the quarter with an unnamed financial institution, the company said today. The transaction was completed Oct. 17, resulting in 23.5 million shares repurchased for $933-million, Yahoo said in today's statement.
The company ended the quarter with $12-billion in cash, compared with $5-billion as of Dec. 31.
Ms. Mayer is boosting spending in other areas, such as startup investments. Earlier this year, the Web portal agreed to acquire analytics startup Flurry Inc. for more than $300-million. Yahoo is also close to investing in mobile-messaging startup Snapchat Inc., a person with knowledge of the situation has said. Technology blog TechCrunch yesterday reported Yahoo is looking to acquire ad-technology startup BrightRoll Inc. for around $700-million.
Mobile products showed particular progress. Ms. Mayer said mobile revenue was more than $200-million in the third quarter and estimated gross revenue in mobile will exceed $1.2-billion this year.
"We have invested deeply in mobile and we are seeing those investments pay off," Ms. Mayer said in the statement.
Yahoo's main online advertising business – display ads – fared less well. Display revenue for the quarter was $447-million, down 5 per cent from a year earlier.