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January 25, 2012

New Yahoo CEO sees earnings slump by 5%

New CEOs first results announcement reports a decline in sales and profit

By Vinod

Yahoo, once an iconic internet company isn’t faring well in its battle for online advertising. Its fourth quarter breakdown announced overnight shows a lacklustre performance, and a big task for under new CEO Scott Thompson.

New Yahoo CEO Scott Thompson

"There’s no question that we need to do better, and we will," said Thompson on Yahoo’s disappointing earnings.

In the October to December period Yahoo earned $296m, down 5% from last year’s $312m. The company’s earnings were in line with analyst predictions.

The 5% drop was blamed on a decline in advertising revenues. Yahoo’s display ad revenue, the company’s primary source of income, slowed to $612m, down 4% on a year ago. Yahoo reported a $19m drop on its full year net earnings of $1.04 billion compared to $1.23bn in the previous year.

The company has struggled to hold on to its CEOs recently. Founder, board member and former CEO Jerry Yang resigned from all his positions within the company last week, claiming he was ‘pursuing other interests.’ Yang’s history with the company has not been happy since he was forced out for Carol Bartz, who struggled to turn the company around. She was sacked in September last year, and COO Timothy Morse was installed as an interim CEO. Scott Thompson took over on January 4th.

Thompson emphasised that increasing shareholder value is an important goal for the company:

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"Our efforts to reposition Yahoo! are not limited to reshaping the core business. We have engaged in a variety of discussions with potential partners to enhance shareholder value. We’re in active discussions with our Asian partners to significantly restructure our holdings in Alibaba Group and Yahoo!"

Yahoo’s revenue dropped from to $4.4bn in 2011 around 5% less than its earned $4.6bn in 2010, which Thompson said is "primarily due to the required change in revenue presentation related to the Search Agreement and the associated revenue share with Microsoft."

Thompson is positive about Yahoo’s plan of action in bringing the company out of its slump and boost its business.

"In 2012 we will be aligning resources behind key areas of focus to enable us to move aggressively in market and grow our business, bringing innovative new products and experiences to both our users and advertisers."

Hopefully Thompson’s plan of action will see a result at this is Yahoo’s 13th straight quarter in revenue decline from the previous year.

The internet company predicted that its net revenue in the first quarter will range between $1.025bn and $1.105bn.

Please follow this author on Twitter @Tineka_S or comment below.

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