Yahoo's Yang Promises Changes Following Q2 Earnings Talk

  |  July 17, 2007   |  Comments

Less than expected earnings were blamed on legacy issues, with new CEO Yang promising a 100 day drive to turn things around.

Yahoo has released its Q2 2007 earnings report, blaming a less than stellar performance on a legacy of prior mistakes, noting revenues from affiliates and display advertising were not as high as expected. The company's top execs promised a turnaround.

Overall, marketing services revenues totaled nearly $1.5 billion for the quarter ending June 30, 2007, up 7 percent increase over the same period last year. Marketing services revenues from Yahoo's owned and operated sites came in at $887 million in Q2 2007, up 18 percent over Q2 2006. At $599 million, the company's marketing services revenues from affiliate sites dropped 5 percent from Q2 2006.

Yahoo's net income fell a bit to $161 million compared to $164 million during the same period in 2006, while revenues rose 8 percent to $1.7 billion over the same period a year ago.

Jerry Yang, co-founder of Yahoo and newly-named CEO, promised investors he will spend the next 100 days planning the company's success through investments, cutting or deemphasizing underperforming initiatives and bringing in new staff.

"I'm well away of the challenges we face. There is a significant gap between where we are and where we need to be in the competitive landscape," Yang said. "There will be no sacred cows and we need to move very quickly."

Yahoo's President Susan Decker acknowledged that the company's performance had not met expectations due to several missteps, including keeping Overture as a standalone business unit, and a failure to meet growing demand for performance marketing opportunities. She pointed to the continued adoption of the Panama ad management platform in international markets, and called the integration of the company's sales and marketing groups as "points of light."

"Various legacy clouds are masking these points of light," said Decker. "We believe that some of the legacy issues that were hampering growth will be addressed."

The Panama ad platform had been hailed in the previous quarter's results despite not meeting financial expectations then either.

Yahoo today also pointed to the finalization of its acquisition of ad exchange firm Right Media, as well as the rollout of its automated, behavioral SmartAds system throughout the rest of the year as positive points.

"I believe Yahoo is too often defined by the competitive landscape," Yang said. "I'm confident that Yahoo can improve performance."

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Matthew G. Nelson

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