Yahoo! Profit Tops Estimates Amid Weak Ad Business; Stock Down

(RTTNews) - Yahoo! Inc. (YHOO) Tuesday reported a 28 percent jump in fourth-quarter profit, mainly on gains from equity interests even as revenues slipped on weak ad business, reflecting the challenges CEO Marissa Mayer faces in trying to restore the company to its halcyon days. Quarterly earnings topped Wall Street estimates, while revenues were in line with expectations.

Investors were apparently not impressed, dragging Yahoo! shares down near 5 percent in after-hours trade on the Nasdaq.

CEO Marissa Mayer has been striving to attract advertisers away from bigger rival Google (GOOG) and others, but the latest quarterly results show it is no easy ride.

Earlier this month, Mayer fired COO Henrique De Castro, who ran the company's ad business for 15 months, betraying concerns that sales efforts were not paying off as expected.

Mayer earlier said that it will take the company at least three years to recover significantly. The company is now said to be seeking two experienced hands to its board.

For the fourth quarter, the Sunnyvale, California-based company posted net income of $348 million or $0.33 cents per share, compared with $272 million or $0.23 per share last year.

Excluding items, adjusted earnings for the quarter were $0.46 per share, compared with $0.35 per share a year ago.

On average, 30 analysts polled by Thomson Reuters estimated earnings of $0.38 per share for the quarter. Analysts' estimates typically exclude special items.

Results for the quarter include earnings in equity interests of $221.6 million, among other items.

Meanwhile, net revenues for the fourth quarter dropped 6 percent to $1.27 billion from $1.35 billion in the prior year quarter.

Revenues, excluding traffic acquisition costs (TAC), edged down to $1.2 billion from $1.22 billion in the prior year. Thirty-one analysts had a consensus revenue estimate of $1.2 billion for the quarter.

Display revenue ex-TAC was $491 million for the quarter, a 6 percent decline from last year, while Search revenue ex-TAC was up 8 percent at $461 million.

Paid clicks grew about 17 percent year-over-year, and price-per-click fell about 3 percent.

During the quarter, Yahoo! launched a new Yahoo Mail, Yahoo Finance, and our new Flickr photo books, while quickening the pace of experimentation.

Yahoo! stock closed Tuesday's regular trade at $38.22, up $1.57 or 4.28%, on a volume of 30.8 million shares. In after hours, the stock dropped $1.65 or 4.32% at $36.57. In the past year, the stock has traded in the range of $19.31 - $41.72.