Did Yahoo’s Earnings Wow Investors?

Marissa Mayer has completed her first full quarter as Yahoo’s (NASDAQ:YHOO) Chief Executive Officer, and it’s time for her to prove that the company is on its way to a profitable future.

Yahoo showed promise in the third quarter. After 100 days in office, Mayer and Yahoo released quarterly earnings in late October that beat Wall Street’s expectations. In the earnings conference call, she identified the main problem facing the company: its transition to mobile. Now, with earnings that narrowly surpassed analysts’ estimates for the fourth quarter, has Mayer shown enough evidence that the company has begun to make good on those promises?

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Yahoo did show improvement, ending a three-year revenue slump with this quarter’s results. For the three-month period, the company posted earnings of $272 million, or 23 cents per share, which represented an 8 percent decrease over the year-ago quarter. Earnings would have beaten the previous year’s results had a one-time accounting charge been excluded. Revenue increased 2 percent to $1.35 billion, which helped the web portal make its first full-year revenue gain since 2008. Including traffic acquisition costs, the company generated $1.221 billion in revenue…
Analysts polled by Thomson Reuters had predicted earnings per share of $0.28 and a revenue of $1.21 billion.

“During the quarter we made progress by growing our executive team, signing key partnerships including those with NBC Sports and CBS Television, and launching terrific mobile experiences for Yahoo! Mail and Flickr,” said Mayer in the earnings press release. “At the same time, we achieved tremendous internal transformation in the culture, energy and execution of the Company.”

But do these slightly better-than-anticipated results mean that Yahoo has begun its turnaround? During the third-quarter conference call, Meyer gave hints at her plans for better search and display products. However, even with the positive results, the raw data did little to put lingering questions regarding the company’s product road map to rest.

To begin her efforts to make Yahoo more relevant, Mayer launched a redesigned version of the company’s email service last December that was meant to be more appealing to mobile users. At the time, Bloomberg reported that the new service had the potential to compete with Google’s Gmail, which has added millions of users as Yahoo Mail’s growth has dropped off.

Shares of Yahoo were trading up 2.66 percent in after hours trading following the earnings release.

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