Yahoo Inc warned that revenue would again slide this quarter as it bleeds traffic to Google and Facebook and as a much-touted search partnership with Microsoft Corp fails to deliver quick results.
Yahoo reported its third consecutive quarter of declining page views on its Web sites. CEO Carol Bartz promised investors that revenue growth would return in the second half of this year once its tie-up with Microsoft takes off.
The weaker-than-expected first-quarter sales forecast came the same day Yahoo announced its second round of layoffs in six weeks, of about 1 percent of its global work force.
Yahoo has struggled to contain costs and jumpstart revenue growth, but Bartz said the firm was committed to investing to grow the company and defended its progress.
“I will not back down on the fact that we are getting momentum,” Bartz said when an analyst contrasted the company’s declining revenue with executives’ claims of progress.
“There is a lot going on here,” she said, citing new features in the company’s Web search product and the successful combination of Yahoo’s search advertising service in the US and Canada with Microsoft in October.
Under the 10-year deal, Yahoo will share 12 percent of its search advertising revenue with Microsoft.
“One of the biggest benefits of the combination of Microsoft and Yahoo was supposed to be on the RPS [revenue per search] side,” said Ben Schachter, an analyst at Macquarie Research.
“We expected it to happen already. We still don’t understand why it hasn’t happened. So I’m not going to be giving them the benefit of the doubt that it will be magically fixed by the middle of this year,” he said.
Yahoo is one the most popular destinations on the Web and the No. 1 provider of online display ads in the US, but the company is facing increasing competition from social networking service Facebook and from Google.
Chief financial officer Tim Morse said Facebook competition was not hurting Yahoo’s display advertising business, in which revenue increased 14 percent year over year to US$635 million.
“All impressions aren’t created equal. With the big customers and branded advertisers, and the premium dollars being spent, we really aren’t seeing that kind of competition,” he said.
Net revenue, which excludes revenue shared with Web site partners, totaled US$1.2 billion in the three months ended Dec. 31, compared with US$1.26 billion a year ago. Yahoo projected that net revenue in the first quarter would range between US$1.02 billion and US$1.08 billion.
Net income in the fourth quarter was US$312 million, or US$0.24 a share, compared with US$153 million, or US$0.11 a share in the year-ago period.
Morse said after financial results were released on Tuesday that there were still more costs to come out of Yahoo in coming years.
Asked if that meant additional layoffs, Morse said: “Over the next few years, there will definitely be some more people who leave, there will be more people who are hired.”
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