Yahoo revenue up in Q2, but earnings per share misses expectations

Eighty-four years later the bidders for Yahoo’s core assets have had a nasty surprise of their own after the company revealed that it probably owes Mozilla a billion dollars and payment may be demanded immediately. When activists including Starboard Value ratcheted up the pressure, they agreed to “strategic alternatives” that included a possible sale. This is courtesy of a deal that the company made with the browser to pay Mozilla roughly $375 million annually so that it could acquire rights to be the default search engine.

Yahoo is scheduled to report its earnings after Monday’s close in what very well could be its last ever earnings report before a planned sale of its internet assets is completed.

Revenue in the company’s emerging businesses, which Mayer calls Mavens – mobile, video, native and social advertising – rose 25.7 percent to $504 million in the second quarter ended June 30. The company says those products saw an overall revenue growth of seven percent YoY to $390 million.

Shares in Yahoo have jumped by around one-third since the start of the year to stand at $37.95 as the sale process reaches its conclusion.

Other efforts to revitalize the search engine giant have proven unsuccessful. Operating costs have increased $500 million since 2012, while revenue has decreased.

At Yahoo’s annual shareholder meeting last month, Mayer said she was “heartened” by all the interest in buying Yahoo.

Yahoo also disclosed that during the second quarter of 2016, it took impairment charges totaling of $482 million for Tumblr.

Instead, Yahoo has been steamrolled by Silicon Valley competitors Google and Facebook, which have grown to dominate digital advertising.

Yahoo is expected to post sales of $1.081 billion for the quarter, down from the $1.24 billion it reported in the same quarter a year earlier, as its ad sales business continues to decline.

Mayer said that even with a bidding process ongoing, she is hoping to revive growth in key areas and cut costs, saying “it is important to maximize the value of Yahoo in any scenario”. Bidders, according to reports based mostly on anonymous sources, include Verizon, AT&T, Quicken Loans co-founder Dan Gilbert backed by Warren Buffett, and private equity companies. Besides of this massive buyback from Yahoo, buying Yahoo’s stake in Yahoo Japan would strengthen Alibaba’s relationship with SoftBank, one of the biggest investors in Yahoo Japan and Alibaba itself. But what remains uncertain is what will happen with the users and the services Yahoo has had all over its 22 years in the market, after the Californian Company has a new direction. In a note to investors, BGC Financial technology research director and analyst Colin Gillis, wrote, “Yahoo is over in our eyes”.