Yahoo's Profits Up, Future Focuses On Mobile

Yahoo's profits rose 46% in the second quarter, but sales came in nearly flat compared with the year-ago quarter, as Yahoo CEO Marissa Mayer continues her attempts to attract brands to advertise across the company's network of sites.

Mayer touted the company's growth in mobile, recently surpassing 340 million monthly mobile users. "Yahoo's future is mobile, and we are delivering mobile first," she said, vowing additional investments in search, video and display.

Net earnings for the quarter, which ended June 30, came in at $331.2 million, up from $226.6 million in the year-ago quarter. Revenue fell 7% to $1.14 billion compared with the year-ago quarter.

Display ad revenue net of traffic costs fell 11% to $423 million in Q2 2013. Programmatic buying had an impact on revenue, Mayer said, citing premium sell-through rates as opposed to non-guaranteed rates as the problem.

Search advertising has become a brighter star for Yahoo, with Microsoft as partner, augmenting revenue with a guaranteed payment that make up for underperforming technology. Search ad revenue rose 5% to $403 million. GAAP search revenue came in at $418 million for Q2 2013, down 9%, compared with $461 million in the year-ago quarter. Search revenue ex-TAC was $403 million, up 5% compared with $385 million for the year-ago quarter.

Paid-search clicks, excluding Korea, rose approximately 21%, benefiting from improved ad formats and the redesign of the search page. The price per click fell 8% in the quarter as a result of a regional mix, compared with the same time period a year ago.

Yahoo's share of U.S. search revenue should fall to 6.5% in 2013 from 6.6% in 2012, as Google's share remains around 73.8%, according to eMarketer. The research firm estimates Microsoft will increase its share to 4.6% in 2013, up from 3.8% last year.

Yahoo announced two advertising formats focused on content during the quarter. Yahoo Stream Ads support native advertising in the news stream of the company's engine and portal. The Yahoo.com Billboard ad also supports richer content.

Not only did Yahoo add new advertising services, but it made nine acquisitions in Q2 to strengthen its products and content support through technology and talent. The companies include Summly, Astrid, Milewise, Loki Studios, Go Poll Go, PlayerScale, Rondee, Ghostbird Software; as well as Tumblr, which could help grow Yahoo's audience to more than one billion monthly visitors.

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