Yahoo CEO Stresses Dedication to Righting the Ship

Yahoo’s new CEO Carol Bartz began the company’s quarterly earnings call with investors in good humor. Noting overall weakness related in part to the recession, she said, “There were some real bright spots in performance, display, and search.” Though the firm reported earnings that landed within analyst predictions for the fourth quarter of 2008, revenues decreased compared to fourth quarter 2007.

Trends experienced throughout the year continued into the final three months of a tumultuous 2008 for the company. Display ad revenue was down 2 percent in Q4, while demand for non-guaranteed inventory and performance-based pricing remained strong. Meanwhile, according to Yahoo Chief Financial Officer Blake Jorgensen, there was an “overall slowdown in volume” of display advertising, particularly premium display, “driven by people moving away from branded advertising [as is typical during] a recession.”

Search revenues worldwide rose 11 percent in the quarter to $436 million, and query growth increased “in the double digits” according to the firm. The company reported fewer commercial search queries recently as a result of the economic downturn.

In response to constant speculation about Yahoo’s plans for its search operation, Bartz said she has no preconceived notions about whether the firm should sell its search business. She called search a valuable part of Yahoo’s business, noting its share of search queries has begun to stabilize.

Yahoo needs “to bring more clarity to our strategy…and be maniacally focused on our users and their experience,” said Bartz. She also stressed that she did not join Yahoo to sell the company.

The company reported revenue of $1.8 billion in Q4 2008, a 1 percent drop compared to Q4 2007. Marketing services revenue totaled $1.6 billion in Q4. Yahoo-owned and operated sites brought in about $1 billion in fourth quarter of 2008, up 3 percent over Q4 2007. The firm’s affiliate sites garnered $531 million during the period, down 4 percent from Q4 2007. That reduction represented the company’s continued move toward improving the quality of its network affiliates.

Yahoo also reported full year results; revenue totaled $7.2 billion in 2008, up 3 percent over 2007.

A year ago, then-CEO Jerry Yang stressed Yahoo’s long-term growth goals, noting the company had been “making profound changes.” Among those changes were layoffs, which still affect the company; Yahoo reported its staff has decreased by 1,600 employees since Q3 2008. This week, the company instituted a salary freeze for all employees.

The firm hopes such cost-cutting measures will help it survive the recession. The company will focus on efficiency and cost management going forward, said Jorgensen.