Yahoo's Bartz Era Begins With Red Balance Sheet
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|Yahoo CEO Carol Bartz|
The pioneering Web portal reported a net loss of $303 million in the fourth quarter, or 22 cents per share, down from net income of $206 million, or 15 cents per share, in the same period last year.
But absent one-time charges of about $603 million, Yahoo (NASDAQ: YHOO) would have posted profits ahead of analysts' consensus of 13 cents -- giving newly minted CEO Carol Bartz a silver lining for her first earnings call with her new company.
"You all know the weak global environment is impacting everyone, and we, of course, are no exception," Bartz said.
Yet Yahoo's results still signify a company whose advertising business has suffered in a wilting economy while it has been dealing with considerable distractions.
At $1.8 billion, total fourth-quarter revenues dropped 1 percent from last year. For all of 2008, the company saw net income decline 36 percent to $424 million -- despite a 3 percent increase in revenue to $7.21 billion.
Bartz said Yahoo was "aggressively managing costs, leaving us better positioned to weather the economic downturn and emerge stronger when advertiser spending improves. We have work to do, but I am excited by Yahoo's opportunities, and encouraged by the tremendous innovation and momentum I've seen since joining the company as CEO."
A sizable part of Yahoo's pain comes from sluggish growth in ad spending. In the fourth quarter, search revenues on Yahoo's sites were up 11 percent from the same period the previous year. By contrast, search revenues in the fourth quarter of 2007 jumped 28 percent from the previous year.
Display ads edged up 2 percent from the fourth quarter in 2007, compared with a 20 percent increase the previous year.
Yahoo's had a tough 2008. Long before it got caught up in the economic maelstrom toward the end of the year, the company came under intense pressure and endured no end of second-guessing as it fended off Microsoft's unwanted acquisition bid, originally announced Feb. 1.
The company is also wrapping up a stout round of layoffs, having announced that it planned to trim its workforce by 10 percent by the end of the year. Yahoo ended the quarter with 1,600 fewer employees than at the beginning, a workforce reduction that CFO Blake Jorgensen said would yield $400 million in cost savings.
In the meantime, the company has continued to push ahead with its ambitious, if somewhat ill-defined, turnaround strategy.
In December, Yahoo made a flurry of product announcements, unveiling a new look for its home page and a redesigned, "smarter" inbox. It also continues to open its platform to the developer community and move toward interoperability with other Web sites.
Introducing her objectives as CEO, Bartz said that she plan to work on "sharpening our strategic focus, improving the pace of our decision making, and streamlining the business."
Shares of Yahoo were up 3.70 percent to $11.76 in aftermarket trading at press time.