Yahoo revenue misses Wall Street expectations

Yahoo Inc missed Wall Street's revenue estimates in the second quarter as some customers unexpectedly cut spending on online display ads towards the end of June, and shares fell more than 6%.
The lower-than-expected revenue, which came even as Yahoo continued to improve its profit margins, raised fresh concerns about Yahoo's efforts to increase revenue growth, and about the health of the online advertising market that Yahoo depends on.
"Display (advertising) is brand driven and everyone is tight with their budgets," said BGC Partners analyst Colin Gillis.
"Any talk of slowing is going to spook investors," he said.
But he noted that Yahoo's challenges in display advertising are also due to competition from online advertising exchanges, including Yahoo-owned RightMedia, which offer marketers less expensive ways to reach consumers on the Web.
Yahoo chief executive Carol Bartz said in a conference call on Tuesday that the company's "top job" was growing revenue, and said that Yahoo continued to make progress adding video and social networking to its network of websites in order to make them more popular with websurfers.
She also said Yahoo's Internet search deal with Microsoft, designed to save Yahoo hundreds of millions of dollars in annual expenses by shifting back-end Web indexing chores to Microsoft, remains on track to go into effect before year's end.
Revenue from search on Yahoo's web sites in the second quarter declined 8% year-on-year, with executives noting that Yahoo did not see as much of "a pickup in monetizable" searches as it had expected.
Last week, Google, the world's No.1 search engine, reported a 24% increase in second-quarter revenue, though the company's increased spending caused the company to miss Wall Street's earnings per share estimates.
Yahoo ranks among the world's most popular web services, with more than 600 mln users of its flagship web site, email and other products, according to the company. But the Internet pioneer's growth has stalled amid competition from search giant Google and a new crop of social networking sites like Facebook.
Yahoo said its revenue in the three months ending June 30 rose to $1.60 bln from $1.57 bln in the year-earlier period.
But Yahoo's net revenue, which excludes revenue it shares with website partners, was $1.13 bln — below the average analyst expectation of $1.16 bln, according to Thomson Reuters I/B/E/S.
Jefferies & Co analyst Youssef Squali said that Yahoo's 19% year-on-year revenue growth in online display ads was impressive. But he noted that investors were hoping for more and were uneasy about the sudden drop off in June.
Yahoo said net income in the second quarter rose to $213.3 mln, or 15 cents a share, from $141.4 mln, or 10 cents a share in the year-earlier period. That was a penny above analysts' average forecast of EPS of 14 cents.
Yahoo forecast a revenue range between $1.57 bln and $1.65 bln in the third quarter. Shares of Yahoo had gained 8% since the start of the month, but are down 21% to $14.27 from their 52-week high of $19.12.