Yahoo Inc’s turnaround effort wavered in the second quarter as the Internet company’s lackluster revenue growth overshadowed a surge in net income.
The results released on Tuesday could cause some investors to doubt the strategy of Yahoo’s no-nonsense CEO, Carol Bartz, who was hired 18 months ago to lead the company out of a prolonged financial funk that has depressed its stock.
Bartz has been able to boost Yahoo’s earnings by cutting costs, but so far hasn’t been able to produce dramatic revenue gains.
The challenges facing Yahoo are similar to those at many other companies that have been fattening their bottom lines by trimming expenses while revenue remains lean.
“We still have plenty of work to do,” Yahoo chief financial officer Tim Morse said in an interview on Tuesday.
He said the second quarter looked fairly strong until last month when several large advertisers suddenly reduced their spending.
“That has made us incrementally more cautious,” Morse said.
Reflecting that circumspect mood, Yahoo predicted its third-quarter revenue would either remain unchanged from last year or increase by as much as 4 percent.
Yahoo shares fell US$0.69, 4.5 percent, in extended trading after finishing the regular session at US$15.20, up US$0.10.
The company earned US$213 million, or US$0.15 per share, in the three months ending in last month. That represented a 51 percent increase from net income of US$141 million, or US$0.10 per share, at the same time last year.
The earnings were a penny above the average estimate among analysts polled by Thomson Reuters.
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