After three years as Yahoo Inc’s chief executive officer, Marissa Mayer is still searching for a viable turnaround plan for the company.
Yahoo on Tuesday reported disappointing third-quarter financial results and said it would soon begin to use Google Inc to power some of its search results and advertising.
In a conference call and Web cast, Mayer told investors that Yahoo was “continuing to face revenue headwinds in our core business” and that it would soon unveil a plan to streamline and focus the company.
“We see a unique moment for Yahoo to narrow our strategy,” Mayer said.
Mayer said the plan is likely to include staff cuts and the shutdown or sale of some of the company’s operations.
The first area to take a hit was Yahoo’s video programming. The company, which has invested heavily in original Web content, such as the Community series, said it was taking a US$42 million write-off in the third quarter on the value of its video assets.
For the third quarter, Yahoo reported revenue of US$1.23 billion, compared with US$1.15 billion in the same quarter a year ago. Net income was US$76 million, or US$0.08 per share, compared with US$6.77 billion, or US$6.70 per share, the previous year, when the company booked big gains from the sale of some of its stake in Chinese e-commerce company Alibaba Group Holding Ltd (阿里巴巴集團).
Revenue and profits fell below Wall Street’s consensus estimates, sending Yahoo’s shares down 1.5 percent in after-hours trading.
Yahoo plans to spin off its remaining 15 percent stake in Alibaba in the next few months, despite lingering concerns about whether the deal would incur taxes for shareholders. The value of the spin-off, which Yahoo said could be delayed until January, accounts for most of Yahoo’s current stock price.
Mayer, a former Google executive, said that Google and Yahoo had signed a Web and mobile search deal this week, in which Google would supply advertising and search results for some search queries made by Yahoo users.
Yahoo had previously relied on Microsoft Corp’s Bing and its own in-house mobile search technology to handle queries, but now it plans to use Google, too.
“We think having an agreement with both search providers really improves competition,” Mayer said.
However, given that Google dominates search results and advertising, the deal is to face antitrust scrutiny from the US Department of Justice. In 2008, Yahoo and Google abandoned a similar deal after opposition from regulators, pushing Yahoo toward Microsoft, which was then the No. 3 search engine.
Search Engine Land founding editor Danny Sullivan said that the marketplace has changed since the last Google-Yahoo deal was proposed and that the partnership could be more palatable to regulators now.
“Yahoo lost all the market share it could lose, gave up its search technology and became this outer fiefdom of Microsoft,” he said.
However, Sullivan said partnering with Google would not solve Yahoo’s longer-term problems in search.
“Whatever numbers you look at, Yahoo’s the third-place player,” he said.
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