Yahoo Earnings: We Did Better Than Expected (But We Still Suck)

The requirement to be upbeat in the face of continued disaster has got to be painful. For that reason alone, some sympathy for those at the top of Yahoo (YHOO) is reasonable. Baseless optimism is about all you could hope for when Yahoo's earnings fell 21 percent year-over-year, as revenue took a 24 percent dive, "primarily due to the required change in revenue presentation related to the Search Agreement and the associated revenue share" with Microsoft (MSFT). You know, the deal that was supposed to be a master stroke.

Oh, yeah, this was really bad. And the hopeful note?:

"We're pleased that revenue, operating income and EPS were all above consensus this quarter," said Tim Morse, CFO and Interim CEO, Yahoo!. "My focus, and that of the whole company, is to move the business forward with new technology, partnerships, products, and premium personalized content -- all with an eye toward growing monetization."
Pulling weakness out of strength
Do people keep a straight face while writing such stuff? Or maybe the only expression is a grimace while in the back of their minds, they're thinking, "Hope I hear from a headhunter soon." All it really means is that analysts have largely given up on the company, and with good reason.

Here's some context for Yahoo's progress. The Interactive Advertising Bureau (IAB) monitors online ad sales. According to its figures, the first half of 2011 saw 23.2 percent year-over-year growth, and the second quarter broke previous revenue records.

Display ads in particular, Yahoo's hope for the future, were up 37 percent year-over-year in the industry during the first six months of 2011. For Yahoo? Display ad revenue was flat year-over-year and down 3.9 percent since the previous quarter. Which was down from the quarter before that.

We're bucking headwinds, add more hamsters to the wheels
Search revenue was down 13 percent, year-over-year. Supposedly the number was "impacted by headwinds." I'm sorry, has the person in management responsible for these statements already mentally taken a plane to a hopeful future elsewhere? What the hell is that even supposed to mean? Hey, Yahoo, others in search advertising seem to be doing pretty well.

Cash and short-term securities have been on a steady march downward for a couple of years. Yahoo still has $2.9 billion on-hand and the company is technically profitable, so why is it burning cash? For acquisitions that do next to nothing for improving the business? For the constant drumbeat of share repurchases to try and stabilize the stock price? And here's the really scary part: with revenue of $1.217 in the quarter that ended in September, Yahoo's projection for fourth quarter revenue -- the single busiest time for commerce and advertising -- is between $1.125 billion and $1.235 billion. That's right, a slight improvement at best and a possible drop, at worst.

Time to send in the clown cars and pack up the board and management. Forget about finding a CEO -- just sell the damned company already. That is, if there's anything left by the time you find a willing sucker. Paging P.T. Barnum.


Image: Flickr user jzakheim, CC 2.0.