Instant View 2: Yahoo's main ad business shrinks again, Intel in line

Yahoo Inc again reported a steep decline in display advertising revenue, disappointing Wall Street investors who had hoped for signs that CEO Marissa Mayer is reviving the company's main business.

And Intel Corp forecast revenue in line with expectations after a first-quarter walloped by what sector analysts say was a record decline in personal computer sales.




"The display side continues to be a big disappointment while the search business was slightly better than our expectations.

"People were disappointed by the display advertising because that's Yahoo's key business. We were looking for display to be down about 9 percent, and they came in at negative 11.

"When you compare this to what it was down last quarter -- it was 4.5 percent -- you can see acceleration in the decline. We'll be looking for reasons behind that."



"These numbers are not very solid, but the second quarter guidance is better than feared. Conditions are probably not as bad as industry reports have suggested recently.

"Single biggest delta in the numbers was that first-quarter tax rate, which was 8 percentage points lower than I was modeling. That preserved some margin in the first quarter. First quarter gross margins came in at the low end of expectations, but they are guiding up on gross margins going forward.

"People may be surprised by the fact that datacenter was down quarter on quarter more than the PC client group. The market really wants to see how they can help customers win in the marketplace. The thinking is that it has to be price, but I don't think that is driving the market.

"They have to help customers build better products and win in the consumer electronics marketplace."

(Reporting By Malathi Nayak and Alistair Barr)