In his first earnings call since Yahoo named him CEO three weeks ago, Scott Thompson mixed bold proclamations of Yahoo's potential with requests for just a bit more time to articulate his vision for the stalled internet behemoth.
As he told Ad Age in an interview earlier this month, Mr. Thompson again stressed that Yahoo will return to a growth business and that success will hinge largely on how well it utilizes data from its huge user base to improve content relevancy for readers and ROI for advertisers. He called data "the cornerstone of the next generation of Yahoo products and experiences" and said that the company would release some "data-related products" to the market "sooner vs. later." At the same time, he said he's still evaluating the best ways to reignite display revenue growth, adding that he could not offer a "detailed strategy until I fully assess our direction."
Revenue in fourth-quarter 2011 was down 3% from the year-earlier period, to $1.17 billion; the Thomson Reuters estimate was $1.19 billion. Net income fell 5%, to $296 million, or 24 cents a share -- flat year-over-year and in line with analyst expectations. The company highlighted a 10% increase in income from operations.
Yahoo said traffic to it sites globally rose 12%. But display revenue dropped 4% year-over-year, to $546 million, in a quarter that saw Yahoo recast its role in the ad ecosystem by banning several groups of ad-tech middlemen from buying its inventory directly.
Chief Financial Officer Tim Morse said Yahoo missed its display revenue target by $15 million. He attributed about $10 million of that to macroeconomic troubles in Europe and the remaining $5 million to shortfalls in both guaranteed and nonguaranteed display revenue in the U.S. Mr. Morse said that he sees no indication that the macroeconomic environment will improve significantly this quarter but that he believes the acquisition of Interclick will help grow Yahoo's ad revenue.Yahoo's share of the U.S. online-advertising market fell to 11% last year from 13% in 2010, according to eMarketer in New York.
In an answer to an analyst's question, Mr. Thompson acknowledged that Yahoo would consider acquisitions to fill holes in its technology capabilities. While he said his focus was getting the display business back on track, he also left open the possibility of Yahoo getting into new lines of business.
"We need to innovate and disrupt, but not just in areas where we've always been," Mr. Thompson said. Again, he did not provide any details on what these new business avenues might be.
For the first time, Mr. Morse acknowledged publicly that the company was talking with Alibaba and Yahoo Japan about divesting some of its stakes in those companies.
Yahoo said it expects first-quarter revenue of $1.03 billion to $1.1 billion.
The earnings call came a week after co-founder Jerry Yang resigned from the board after 17 years at Yahoo.