Yahoo Inc Chief Executive Scott Thompson said reviving the company's flagging display advertising business was his "highest priority," even as he crafts a broader plan to bring the struggling Internet company back to fighting form.
Continue Reading Below
"There's no question that we need to do better," said Thompson on his first quarterly earnings since taking the reins earlier this month, as Yahoo reported another decline in sales and profit on Tuesday.
Analysts prodded Thompson for clues about his plans for Yahoo Inc, which fired former CEO Carol Bartz in September and last week saw co-founder Jerry Yang resign unexpectedly, but all they received were boilerplate comments about how the company needs to "do better" and "get innovative products that matter into the market."
The lack of details didn't damage Wall Street's assessment of Thompson's debut, with many analysts appearing willing to give the former PayPal President some breathing room to settle in and figure out a strategy.
"He seemed to be speaking with a greater sense of urgency to act than his predecessors have," said Stifel Nicolaus analyst Jordan Rohan.
Thompson, along with Chief Financial Officer Tim Morse, gave few hints about the progress of Yahoo's strategic review as well, dashing hopes that his arrival might hasten a transaction.
Continue Reading Below
Morse said talks with Yahoo's Asian partners -- Alibaba and Softbank -- about a restructuring were continuing but beyond that provided little concrete detail on where things stand.
Thompson, who was only hired as CEO two weeks ago, added that the company's board has narrowed down its options to the ones that appear "most promising."
Shares of the company slipped 9 cents to $15.60 in after-hours trade.
TO INVEST IN CORE BUSINESSES
A Boston native with a thick accent, Thompson said he would infuse the roughly 14,000-employee organization with speed.
"When it comes to making decisions, I make them quickly and then push to move fast, fast, fast," he said.
"We will get speed back into the equation and move aggressively. To me that's how we get to playing offense rather than defense."
He stressed that Yahoo would invest the majority of its resources into its core businesses, while remaining open to potential acquisitions and looking for "revenue streams that look different from what we're doing today."
He also addressed the age-old identity question that has frustrated many of the company's previous CEOs, noting that Yahoo is "fundamentally" both a media company and a technology company. "We better be darn good at both," he said.
One of the most pressing concerns is Yahoo's display advertising business, which is facing increasing competition from Google and Facebook, and which declined in the fourth quarter.
"Their core display (business) is becoming an issue. It takes the company from being a growth company to being a melting ice cube. So it's a big deal," said Brett Harris, an analyst at Gabelli & Company.
Yahoo's Morse said that macroeconomic factors, particularly in Europe, resulted in weaker than expected display advertising revenue in the fourth quarter and continued to be a concern.
"We still look out, especially upon Europe, with some caution," Morse told Reuters in an interview on Tuesday.
But he said Yahoo was seeing some positive trends in the new year, noting that some large advertisers that had limited their ad spending with Yahoo in 2011, had already committed to "meaningful upfronts" in 2012.
The struggling Internet company projected that its net revenue in the first quarter would range between $1.025 billion and $1.105 billion.
The company earned $296 million in net income in the three months ended Dec. 31, or 24 cents a share, compared with $312 million, or 24 cents a share, in the year-ago period.
Analysts polled by Thomson Reuters I/B/E/S were expecting 24 cents per share in profit.
In the fourth quarter, Yahoo reported net revenue, which excludes fees that Yahoo shares with Web partners, of roughly $1.17 billion, compared with $1.205 billion the same time last year.
Display ad revenue, Yahoo's main source of revenue, totaled $612 million for the quarter. Search ad revenue for the quarter came in at $465 million, $48 million of which stemmed from its partnership with Microsoft.
Thompson said he had spent his first few weeks at Yahoo meeting with the company's employees, managers and customers.
While Thompson said he wouldn't lay out a detailed strategy until he has fully assessed Yahoo's direction, he pointed to data as a key building block for the company's future.
Yahoo will leverage its deep stockpile of data about the company's roughly 700 million users to provide better products for Websurfers and better services for advertisers, Thompson said.
"If you believe data and great technology and great technologists can begin to predict what is in a user's mind and what they want to do next, having that base of data to start from is a big, big advantage," said Thompson.
(Reporting By Alexei Oreskovic; Editing by Bernard Orr)