This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

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.

Yahoo!'s Big Ad Exec Is Out

Yahoo!'s Alibaba Treasure Will Have to Wait

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:

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
YHOO $44.80 0.32%
AAPL $126.97 -0.49%
FB $84.00 1.10%
GOOG $536.18 0.15%
TSLA $209.64 2.10%


DOW 17,984.95 -49.98 -0.28%
S&P 500 2,100.38 -0.02 -0.00%
NASDAQ 5,018.49 +23.8880 0.48%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs