NEW YORK: Yahoo Inc. on Tuesday turned in another poor quarter and warned investors of a possible revenue hit in the advertising-heavy holiday period, furthering fears that Chief Executive Marissa Mayer’s turnaround plan has stalled.
With doubts growing as she enters her fourth year at the helm, Ms. Mayer signaled Yahoo will adopt a new strategy to “reset” the company’s focus on fewer areas and shift further into mobile.
Weak demand from advertisers has hampered Ms. Mayer in her tenure at Yahoo. Her investments in high-profile content, including rights to live stream a coming NFL game, and development of a suite of new mobile apps, have so far failed to attract enough ad dollars to grow the business.
Yahoo reported its revenue rose about 7% to $1.23 billion in the third quarter. But its sales excluding commissions paid to search partners fell 8% to $1 billion, the largest decline in at least four years. Yahoo has begun to pay its partners more money for users in recent quarters.
The Sunnyvale, Calif., company now expects fourth-quarter revenue, including traffic acquisition costs, of $1.16 billion to $1.2 billion, down from $1.25 billion last year and below the average analyst estimate of $1.33 billion, according to Thomson Reuters.
“The guidance just is horrible,” said Sameet Sinha, an analyst at B. Riley & Co. “They are talking about numbers being down sequentially in the fourth quarter, which is unheard of for an advertising company—it’s seasonally the strongest quarter of the year.”
On a call with analysts Tuesday, Ms. Mayer acknowledged her difficulty growing Yahoo’s core business of advertising, and hinted at a major reorganization on the horizon.
