Tag Archives: yhoo

Yahoo Lacks ‘Growth Pulse,’ Stock Down On Latest Turnaround Plan

Yahoo ( YHOO ) outlined a new turnaround strategy late Tuesday along with a Q4 revenue beat, but the beleaguered Web portal’s new plan “sounds a lot like the old plans,” according to Pacific Crest Securities analyst Evan Wilson, who lowered his 2016 revenue and earnings estimates for the company. “Yahoo beat Q4 estimates but is still struggling for organic growth,” wrote Wilson in an industry note. He said that Yahoo’s new  plan “looks more dire than the previous plan.” Yahoo CEO Marissa Mayer said that the plan includes a new round of job cuts and a possible reverse spinoff of the core business. And, she said, “The board will also engage with other qualified strategic proposals.” Analysts say that Yahoo’s latest plan essentially puts the company on the sales block. “After 10 reported layoffs, countless plans and CEO after CEO, it is hard to blame management or the strategy,” wrote Wilson. “The core search and display assets are limited by scale and data, and we do not see a way out of it save for linking with a platform that is not so limited.” Yahoo stock closed down 4.8% at 27.68 on the stock market today . Earlier in the day, Yahoo slid to 26.57, its lowest point since September 2013. Yahoo stock is down 38% over the past 12 months. Yahoo stock got at least six price-target cuts from investment banks Wednesday. Rosenblatt Securities analyst Martin Pyykkonen downgraded it to sell from neutral, saying that he couldn’t find “a growth pulse” on Yahoo stock, as advertising dollars increasingly slip away to rivals. “ Facebook ( FB ), Alphabet ( GOOGL ), Netflix ( NFLX ), etc. are obvious, but there are also a vast number of smaller properties taking usage and traffic away from Yahoo and its properties,” Pyykkonen said. Nomura analyst Anthony DiClemente said that while Yahoo’s core business was “modestly higher” in Q4, the company’s guidance for Q1 and 2016 missed his expectations. “We were discouraged by Q1 guidance, which suggests 13% margins; guidance for Q1 implies net revenue and EBITDA (earnings before interest, taxes, depreciation and amortization) declines of 19% and 53% year over year, respectively,” said DiClemente. Nomura lowered its target price on Yahoo stock to 34 from 40, adjusting for recent changes in the valuation of Yahoo’s holdings in China e-commerce giant Alibaba Group ( BABA ). Yahoo owns a 15% stake in Alibaba, about 385 million shares. After an initial plan to spin off its Alibaba shares, Yahoo reversed course following tax concerns. On Tuesday, Yahoo indicated that a reverse spinoff of its stake in Alibaba still remains a possibility. But Yahoo will close its offices in Dubai, Mexico City, Buenos Aires, Madrid and Milan. Alibaba stock was down 3%, near 63, in midday trading Wednesday, and its shares are down more than 30% in the past 12 months. Along with its Q4 earnings, Yahoo announced that it will cut 15% of its workforce — roughly 1,600 jobs — and look to sell non-core divisions and assets, such as patents and real estate, as part of a strategic plan to return the company to what it forecasts as modest though accelerating growth in 2017 and 2018. The company’s turnaround plan includes continued investment in what the company calls “Mavens,” Mayer said. Mavens refers to Yahoo’s mobile, video, native and social businesses, where its ad revenue is growing. Mayer said that Yahoo’s consumer products division will consist of three global platforms — Search, Mail and Tumblr — and that it will focus on four vertical markets: news, sports, finance and lifestyle. Yahoo said that Q4 earnings excluding items plunged 57% from the year-earlier quarter to 13 cents a share, meeting the views of FactSet and analysts polled by Thomson Reuters. Yahoo said that revenue minus traffic acquisition costs — what the company pays other sites to carry its ads — fell 15% to $1.002 billion. Still, it that beat FactSet’s $948.2 million forecast. Yahoo added that its total revenue in Q4 rose 1.6% to $1.27 billion, where Thomson Reuters had expected $1.19 billion. For Q1, Yahoo is guiding GAAP revenue at $1.005 billion to $1.09 billion, down 17.9% to down 11%.

Yahoo Confirms 15% Workforce Cut, Focus On Mobile Growth

Yahoo ( YHOO ) late Tuesday confirmed it will cut 15% of its workforce and look to sell non-core divisions and assets, such as patents and real estate as part of a strategic plan to return the company to modest-though-accelerating growth in 2017 and 2018. Shares were down almost 6% near noon Wednesday. Yahoo will close five offices — in Dubai, Mexico City, Buenos Aires, Madrid and Milan — with most of the changes expected to take place in Q1. By the end of 2016, Yahoo said it anticipates having about 9,000 employees and fewer than 1,000 contractors, representing a workforce that is 42% smaller than it was in 2012. It expects to save $400 million a year in short-term operating expenses from these cuts. Yahoo employees have been bracing for layoffs since Yahoo hired McKinsey & Co. in November to pave the way for a reorganization and select which business units should stay and go. Yahoo reported having 10,700 employees at the end of Q3, down 14% from Q3 2014. The company’s turnaround plan includes continued investment in what the company calls “Mavens,” Yahoo CEO Marissa Mayer said on the company’s earnings conference call. Mavens refers to Yahoo’s mobile, video, native and social businesses, where its ad revenue is growing. “Our plan involves continued investment in Mavens to counterbalance legacy declines, with a particular emphasis on mobile,” Mayer said on the call. “With Mavens revenue at over $1.6 billion for the year, mobile is the largest contributor, adding over $1 billion, or nearly a quarter of our traffic-driven revenue.” The company said Mavens revenue jumped 45% in 2015, and it expects a 12.5% increase in 2016, to $1.8 billion. Mavens revenue rose 26% in Q4, to $472 million. The Internet company announced its new strategic plan along with the release of Q4 earnings  that met Wall Street expectations and revenue that beat. Yahoo Focus: News, Finance, Sports, Lifestyle Mayer said the Web portal will narrow its focus to “just four areas — news, sports, finance and lifestyle” — in a bid to provide great content, tools and services in those areas. “By focusing on areas where Yahoo is strong and differentiated, we can propel our execution to a new level,” Mayer said. “Yahoo cannot win the hearts and minds of users and advertisers with a complex, fragmented portfolio of products and assets, especially if some no longer meet our aggressive growth goals or distract from growth products,” she said. “A simplified Yahoo will yield better focus, execution and increase shareholder value.” Mayer said Yahoo will “play to our strengths to grow user engagement, particularly in mobile” to drive growth. The company will also “continue to prune our portfolio” of poorly performing products, she said, as well as “size (our) business accordingly.” As part of its reorganization, its consumer products will consist of three global platforms: Search, Mail, and Tumblr, and the four vertical markets of news, sports, finance and lifestyle. For advertisers, Yahoo will be defined by two core offerings: Gemini and BrightRoll. The company also indicated a reverse spinoff of its 15% stake in Chine e-commerce leader  Alibaba Group ( BABA ) — an idea the company had put aside largely on tax concerns — remains a possibility. Yahoo owns a 15% stake in Alibaba, or about 384 million shares. “Separating our Alibaba stake from our operating business continues to be a primary focus, and our most direct path to value maximization,” Yahoo Chairman Maynard Webb said in the company’s release . “In addition to continuing work on the reverse spin, which we’ve discussed previously, we will engage on qualified strategic proposals.” In December, Yahoo had dropped a nearly one-year-old plan to spin off its $31 billion stake in Alibaba. As for its quarterly results, Yahoo said Q4 earnings excluding items plunged 57% from the year-earlier quarter to 13 cents a share, meeting the views of FactSet and of analysts polled by Thomson Reuters. Yahoo said revenue minus traffic acquisition costs — what the company pays other sites to carry its ads — fell 15% to $1.002 billion, but that beat FactSet’s $948.2 million forecast. Yahoo said total revenue in Q4 rose 1.6% to $1.27 billion, where Thomson Reuters had expected $1.19 billion. For Q1, Yahoo is guiding GAAP revenue at $1.005 billion to $1.09 billion, down 17.9% to down 11%. Yahoo stock fell 1.7% in Tuesday’s regular session, to 29.06. Image provided by Shutterstock .  

After-Hours Action: Yahoo, Gilead, Illumina, Chipotle

Loading the player… Here’s a quick rundown of Tuesday’s after-hours action: Yahoo ( YHOO ) reported fourth-quarter earnings dropped 57% but were in line with estimates. Revenue edged up 1.6% to beat views. The company says it’s exploring strategic options, including a reverse spin-off of its Alibaba stake and the sale of non-core assets. Yahoo plans to cut 15% of its workforce. Shares fell 3% late. Edwards Lifesciences ( EW ) said fourth-quarter revenue increased 9%, while earnings jumped 19%. Both surpassed estimates. The medical device maker also raised its 2016 guidance above forecasts. Shares jumped nearly 5% in extended trade. Gilead Sciences ( GILD ) handily topped fourth-quarter earnings and revenue estimates. EPS popped 37%, and revenue rose 16%. Its 2016 product sales forecast was roughly in line with analyst estimates. The hepatitis C and HIV drugmaker also announced a $12 billion share buyback program. Shares rose fractionally late. Illumina ( ILMN ) fourth-quarter earnings fell 7% on a 15% revenue rise. The bottom line missed by a penny, while the top line beat views. The maker of gene-sequencing systems issued full-year revenue guidance that was in line with views, but its earnings guidance that was light. Shares fell 2% late after closing down 2.7%. Chipotle Mexican Grill ( CMG ) issued its first quarterly report since it was hit with an E. coli outbreak. Chipotle’s Q4 earnings plunge of 44% was not as bad as Wall Street feared, while its 7% revenue decline missed expectations. The CDC declared on Monday that the outbreaks were over, but a criminal investigation is ongoing. Chipotle warned that 2016 “will be a very difficult year,” predicting first-quarter EPS will be breakeven. Wall Street had expected $2.08 a share, down 46%. Chipotle tumbled 6% in late trading.