BY LEHAR MAAN
Yahoo Inc (YHOO.O) said on
Tuesday it had signed a search advertising deal with Google Inc, providing a
potential boost to Marissa Mayer's efforts to turn around the company, which
also reported revenue and profit that fell short of market estimates.
The deal with Google, a
unit of Alphabet Inc (GOOGL.O), builds on
an existing search partnership Microsoft Corp (MSFT.O) under
which Yahoo gets a percentage of revenue from ads displayed on its sites.
Yahoo, whose shares
were down 1.6 percent in after-hours trading, said the companies have agreed to
delay implementation of the deal in the United States to allow the antitrust
division of the Department of Justice to review it.
Yahoo has been
struggling to boost revenue from ad sales in the face of stiff competition from
Google and Facebook (FB.O).
The Google deal was one
of the few bright spots included in the company's third-quarter results
statement.
Yahoo said it expected
fourth-quarter revenue of $1.16 billion–$1.20 billion, well below the average
analyst estimate of $1.33 billion, according to Thomson Reuters I/B/E/S.
Mayer, in her fourth
year as chief executive, said the forecast was "not indicative of the
performance we want."
"We are also
experiencing continued revenue headwinds in our core (advertising) business,
especially in the legacy portions," Mayer said on a call with analysts.
MAVENS PERFORM
Yahoo said the proposed
spinoff of its 15 percent stake in Chinese e-commerce giant Alibaba Group
Holding Ltd (BABA.N) - a key
issue for shareholders - may now close in January.
Yahoo earlier this year
sought a private letter ruling from the Internal Revenue Service to confirm
whether the transaction, worth about $27 billion currently, would result in a
tax obligation. The tax agency denied the request, but Yahoo said it would go
ahead with the spinoff by year-end anyway.
Many analysts attribute
little value to Yahoo's core business without its Asian assets, which also
include a 35 percent stake in Yahoo Japan Corp (4689.T).
Apart from the Google
deal, the only other good news came results came from Yahoo's emerging
businesses, which Mayer calls Mavens - mobile, video, native and social
advertising.
Revenue in that area
rose 43 percent to $422 million in the quarter. Native advertising refers to
ads that blend into the type and style of the content being viewed.
Excluding items, the
company earned 15 cents per share, missing the average analyst estimate of 17
cents.
Revenue after deducting
fees paid to partner websites fell to $1.0 billion from $1.09 billion, and the
company forecast a drop to $920 million-$960 million in the current quarter.
Traffic acquisition
costs, the amount Yahoo spends to attract users to its websites, jumped to $223
million in the quarter from $54 million a year earlier.
GAAP revenue rose 6.8
percent to $1.23 billion, falling short of the average analyst estimate of
$1.26 billion, according to Thomson Reuters I/B/E/S.
Through Tuesday's close
of $32.83, Yahoo's shares had lost 35 percent this year.
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