SAN FRANCISCO - Yahoo (YHOO) continues to limp along as the Internet company prepares to shed the financial crutch that has been propping up its stock during the three-year reign of CEO Marissa Mayer.
The latest evidence of the challenges facing Mayer emerged Tuesday with the release of Yahoo's second-quarter earnings report. The company posted a loss of nearly $22 million, while its net revenue remained unchanged from the previous year at $1.04 billion.
If not for the costs of employee stock compensation and one-time accounting items, Yahoo said it would have earned 16 cents per share -- 2 cents per share below the average estimate among analysts polled by Zacks.
Yahoo's stock fell nearly 2 percent in extended trading after the numbers came out, before regaining some of the loss.
The lack of net revenue growth is telling because it points to a financial malaise that has been dogging Yahoo for most of the past three years.
Even though the volume of Internet advertising has been steadily rising during that stretch, Yahoo's revenue has been backpedaling while rivals such as Google (GOOGL) and Facebook (FB) have been sprinting further ahead in the race for Web surfers' attention and marketing dollars.
Mayer has been promising to engineer a turnaround since Yahoo hired her away from Google, but she has made only grudging progress so far. Yahoo's net revenue now has decreased or been unchanged from the previous year in eight of the previous 10 quarters.
Despite that funk, Yahoo's stock has more than doubled under Mayer's leadership, though the gain has had little to do with her strategy. Investors latch on to Yahoo primarily because it has owned a large stake in one of China's hottest Internet companies, e-commerce specialist, Alibaba Group (BABA).
Pressured by shareholders, Yahoo earlier this year filed plans to spin off its remaining 384 million Alibaba shares into a separate company that will be called Aabaco. Yahoo is still awaiting approval from the IRS to do the split on a tax-free basis, something that the Sunnyvale, California, company expects to receive before the end of the year.
Yahoo's Alibaba stake is currently worth nearly $32 billion and represents most of Yahoo's market value.
Without the Alibaba stock in its investment portfolio, Yahoo will probably have to start boosting its revenue -- or Mayer may face more shareholder unrest.
The nagging doubts about Yahoo's growth prospects have led to its stock dropping by more than 21 percent this year.