Yahoo Beats Second Quarter Earnings Expectations, Stock Drops on Slimmer Revenue

Jacob Harper |

Yahoo! Inc. (YHOO) traded heavily before earnings came in after the bell July 16, and the company surprised analysts by beating earnings expectations. Yahoo announced that they earned 35 cents a share, despite declining revenues. The analyst consensus for the tech company was 26 cents a share, down from the 27 cents a share from last year’s period. 35 cents is certainly a victory for the company, albeit a small one.

One of the bright spots expected to contribute to the company’s report is the improved performance of their Asian e-commerce company Alibaba. Yahoo cited cash from the company as a positive for stockholders in their earnings report. "We are happy to announce that as of today we have essentially completed our commitment to return $3.65 billion from our Alibaba Group proceeds to shareholders, repurchasing a total of 190 million shares," Yahoo! CFO Ken Goldman said.

Yahoo has been stymied by a lack of traditional revenue streams, and their advertising has sagged. And despite good news from Alibaba, and an overperfomance of expectations, the EPS stll wasn't up to snuff for investors.

Analysts expected the tech company to report flat revenue and a drop of 4 percent on earnings from the second quarter of 2012.

In the first quarter of 2013, Yahoo beat earnings expectations but revenue declined to 1.07 billion from the quarter. Yahoo posted $402 million in advertising revenue, representing a drop of 11 percent from the same period in the year prior.

One year prior to the earnings report, Yahoo installed former Google exec Marissa Mayer as CEO. Her leadership, and focus on broadening Yahoo’s demographic while cutting costs, has been seen as instrumental in turning the company around. But Yahoo's declining revenue, and a feeling they're lagging behind tech stalwarts like Google (GOOG) , dogs the company.

Yahoo was down 1.68 percent on the expected poor earnings per share to 26.88 On the delivery of the report, the stock dropped after hours anoter 1.64 percent to hit 26.44.

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Companies

Symbol Name Price Change % Volume
GOOG Alphabet Inc. 746.08 -1.84 -0.25 914,405
YHOO Yahoo! Inc. 40.05 0.42 1.06 3,772,972
MDHID Medical Alarm Cncpt Hldg n/a n/a n/a 0

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