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Yahoo! Plunges: What Wall Street Thinks

NEW YORK (TheStreet) -- Yahoo! (YHOO - Get Report) shares fell sharply Wednesday after the company's second-quarter revenue came in below Street expectations, and concerns about the core business continue to weigh on CEO Marissa Mayer. 

Sunnyvale, Calif.-based Yahoo! earned 37 cents a share on a non-GAAP basis, generating $1.04 billion in revenue ex-TAC (traffic acquisition costs), down approximately 3% year-over-year. Adjusted EBITDA for the second quarter of 2014 was $340 million, an 8% decrease compared to the second quarter of 2013.

Analysts were expecting 38 cents a share on $1.084 billion in revenue. and under consensus estimates of a 5% dip in revenue to $1.08 billion in the second quarter.

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Mayer noted that she was not satisfied with the results, and despite several areas of strength, most notably Yahoo! Search, the declines elsewhere impacted the results. "In Q2, we saw display revenue decline, further highlighting the fact that we need to work faster to ameliorate the negative trends.  I believe we can and will do better moving forward," Mayer said in the press release. "Overall, I remain confident in Yahoo's future, our strategy, and our return to long-term growth."

Shares of Yahoo! plunged in early Wednesday trading, falling 4.9% to $33.86.

Mayer has been adamant that the transformation of Yahoo!'s core business (Search and Display) will take years, as she reinvests in the business, looking to boost slowing and declining revenues. "What we know is this transformation is not a singular event," Mayer said on the earnings call. "It is a series of events and quarters, some more challenging than others and some more successful than others and it will take time. In the case of Yahoo!, I have stated in the past that we believe a transformation of this size and scale will take multiple years and we continue to believe that is the case today."

Yahoo! also announced that it intends to return 50% of the Alibaba initial public offering proceeds to shareholders. Yahoo! and Alibaba agreed that Yahoo! could reduce the number of Alibaba shares it is required to sell in the IPO to 140 million, down from 208 million. The Internet media company holds a total of 523.6 million shares in Alibaba.

Following the earnings release, analysts on Wall Street were largely cautious, noting the company was in a turnaround mode but still questioning Yahoo!'s core business. Here's what a few of them had to say:

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