Yahoo in the first quarter continued its whirlwind pace of acquisitions, announced unified ad platforms and launched slick new properties like Yahoo Tech and Yahoo Food. And lately, reports suggest the company is making a fresh push into video, with TV-style programming in the works as well as a possible video acquisition.
But those moves are all about the future. For the first quarter, Yahoo is expected to again show roughly flat growth. Wall Street analysts, on average, project the Web giant will report net revenue of $1.08 billion for the first three months of 2014, compared to $1.07 billion a year ago. Yahoo has forecast revenue in a range from $1.06 to $1.10 billion.
When it comes to earnings, analysts project an adjusted profit of $318 million or 37 cents a share versus 38 cents a year ago.
Yahoo saw display advertising fall 6% in the fourth quarter as a result of lower prices paid per ad. The pressure on pricing is expected to continue in the quarter, with RBC Capital Markets analyst Mark Mahaney predicting a 2% drop in display ad sales, driven in part by the continued rise of programmatic buying on the site.
Brian Wieser, senior analyst at Pivotal Research Group, suggests in a research note that Yahoo’s lack of a full-time Chief Revenue Officer since former COO and de facto CRO Henrique de Castro left the company in January is hurting efforts to boost display ad sales. The company is reportedly close to hiring a new CRO soon.
Search -- Yahoo’s other key ad business -- has fared better, increasing 8% in the fourth quarter, after payments made to partners. Mahaney expects growth to pick up in the first quarter to the tune of 11%. Similarly, Wieser predicts 14% growth, calling search “the one area we think has the most significant near-term promise.”
Analysts will also be looking for more insight on efforts to monetize Tumblr since Yahoo acquired the social blogging site in May 2013. In the last
quarter, it said Tumblr’s user base had grown 30% since March 2013 and mobile users by 50%.
Yahoo also began using its own ad platform to power sponsored posts on Tumblr.
With eight aqui-hires in the first quarter, Yahoo hardly slowed down its aggressive acquisition strategy under Marissa Mayer. The deals -- each estimated each at less than $50 million -- were aimed at enhancing the company’s technology and talent in mobile, social media and video.
Mayer has long emphasized mobile and video as key components of Yahoo’s turnaround. The Web giant appears to be making a renewed push especially around video lately, with Yahoo expected to announce long-form original programming at this year’s NewFronts akin to that offered by streaming services, such as Netflix.
The company is also rumored to be in hot pursuit of a video-hosting site after a failed bid to acquire Dailymotion last year. Video syndication firm NDN is reportedly among the targets. More video inventory would be helpful, according to Wieser, but content from a provider like NDN could prove highly commoditized.
Yahoo’s expansion into original “TV “ content represents a chance to grab real TV ad dollars, but success is far from assured given the difficulty in picking hit shows.
To help expand its video ad inventory in the meantime, Yahoo on Monday announced the expansion of its content partnership with music video provider Vevo. The deal will extend Vevo’s programming from Yahoo Music to its video hub -- Yahoo Screen. After launching in the U.S., the deal will extend to the U.K. Germany, Spain, France and Italy, as well as the Yahoo Screen mobile app.
Regardless of its core business, Yahoo continues to be buoyed by its 24% stake in Chinese e-commerce giant Alibaba Group. The company is expected to file as soon as this month for an IPO in the U.S. that could value it at more than $100 billion. So high are expectations for the offering that the Alibaba stake is estimated to account for two-thirds or more of Yahoo's current valuation.