Yahoo’s management overhaul seems to have done good for the company. Recently released quarter results look promising as Yahoo saw performance beat market expectations. This was the first quarter since the third quarter of fiscal 2008 that the company’s revenues reported growth over the previous year.
Yahoo’s (Nasdaq: YHOO) Q1 revenues grew 1% over the year to $1.08 billion, ahead of the Street’s target of $1.06 billion. EPS of $0.23 was also significantly ahead of the market’s projected earnings of $0.17 per share and reported growth of 28% over the year.
Display revenues for the quarter fell 4% over the year to $0.47 billion, while search revenues grew 8% over the year to $0.36 billion.
For the current quarter, Yahoo expects net revenues of $1.03 billion-$1.14 billion, surpassing market expectations of $1.08 billion.
Yahoo!’s Revamped Strategy
Yahoo!’s management unveiled their strategy for turning around the company. They are starting by consolidating their technology platforms and shutting down properties that do not bring in either the user engagement or revenues that management expects.
While management did not give any specifics on the properties they will shut down, they did say they will be looking to close more than 50 properties. Analysts believe most of these properties will be outside the U.S. It is also unclear if Yahoo plans to sell their Asian assets, including Alibaba and Yahoo Japan, as part of this divestiture. Reports reveal that Yahoo may be looking at selling a part of their stake in Alibaba, while their deal with Softbank for Yahoo Japan may not go through on account of differing target price expectations.
Yahoo, meanwhile, expects that the divestiture will help them deliver on the second strategy of improving core properties. Yahoo defines their core properties as media, connections, and commerce businesses, including news, finance, sports, entertainment, and mail.
Third, they are working to increase engagement and revenue from their core properties by improved personalization of their core assets. Yahoo will use the data they have about their users to enable more personalized views. They are accelerating the deployment of platforms and technologies they have developed to make their properties more scalable, nimble, flexible, and less costly and time consuming to run. Finally, they are refocusing their research and development efforts on their owned and operated properties instead of investing it in development of platforms for outside publishers. The company is also becoming leaner and recently announced plans to lay off more than 2,000 employees, nearly 14% of their workforce, as part of cost control initiatives.
Yahoo! still has a long way to go, considering eMarketer’s estimates that the U.S. online ad market grew 23% over the year during the first quarter this year. But at least under the new management, the company seems to have started streamlining. For now, their stock is trading at $15.53, with a market capitalization of $18.85 billion. It touched a 52-week high of $18.84 in May 2011.