Yahoo’s (NASDAQ:YHOO) turnaround efforts will be tested when it releases its second-quarter earnings, scheduled for after close of markets on Tuesday. While the company had managed to show some momentum in the first quarter under former chief executive Scott Thompson, its change of leadership since will now come under scrutiny.
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The pressure will be on Ross Levinsohn, who took over as interim CEO in May after Thompson lost his job over apparent misinformation on his resume. Thompson had managed to guide Yahoo to the first year-over-year increase in its quarterly net revenue since 2008. Net revenue rose by less than 1 percent, a small increase but a symbolic one after 13 consecutive quarters of decline.
This time, analysts are projecting earnings of 20 cents per share on net revenue of $1.09 billion. Last year in the same quarter, Yahoo had earned $237 million, or 18 cents per share, on net revenue of $1.08 billion.
According to the Associated Press, analysts are predicting that the company’s net revenue in the last quarter was helped by gains from the ads the company has sold for its popular news, sports, finance, and entertainment videos. The video content is being provided by one of Yahoo’s newest partners, ABC (NYSE:DIS). Yahoo should also receive gains from its stakes in two of Asia’s most successful Internet companies, China’s Alibaba Group and Yahoo Japan.
Yahoo’s earnings this quarter will be cut by an anticipated charge of up to $145 million, covering severance costs for 2,000 employees it let go recently. The jobs cuts are expected to reduce Yahoo’s expenses by about $375 million annually, and some analysts believe the company may announce even more cuts soon. It was already planning to close, sell, or combine several of its little-used services under Thompson, and Levinsohn has also spoken of further cuts.
While Yahoo’s stock has been far from healthy, its website remains among the most popular on the Internet despite pressure from rivals such as Google (NASDAQ:GOOG) and Facebook (NASDAQ:FB), with over 700 million monthly visitors.
Levinsohn may also be announced as a permanent chief executive just before the announcement of second-quarter earnings.
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