Troubled search outfit Yahoo’s quarterly earnings disappointed the cocaine nose jobs of Wall Street in what may be the company’s last financial report before it flogs off its core business.
Yahoo announced a $482 million write-down on the value of Tumblr, the social media service that it boughtin 2013 for $1.1 billion.
Yahoo is in the process of auctioning off its search and advertising business, and is expected to choose a winner this week. The company said its board has made “great progress on strategic alternatives” but did not comment further on the auction process.
Verizon and AT&T Inc are said to be in the running to acquire the core business, along with private equity firm TPG Capital and a consortium led by Quicken Loans founder Dan Gilbert and backed by Warren Buffett.
Yahoo is not in trouble of course. It owns large stakes in Chinese ecommerce giant Alibaba and Yahoo Japan, which are worth far more than the company’s internet business.
After the Tumblr write-down, the company posted a net loss of $439.9 million compared with a loss of $21.6 million a year earlier.
Although total revenue rose to $1.31 billion from $1.24 billion a year earlier, the seeming improvement was the result of a change in the way the cost of acquiring traffic is counted. After deducting fees paid to partner websites for traffic, revenue fell to $841.2 million from $1.04 billion.
Analysts can’t work out what is taking Yahoo so long to complete the sales, unless it wants too much dosh for some of its assets.
Revenue in the company’s emerging businesses such as mobile, video, native and social advertising – showed some life, rising 25.7 percent to $504 million in the second quarter ended June 30.
However Yahoo continues to be canned by decreases in gross search revenue that is only expected to get worse. Gross search revenue for the quarter was $765 million, down 17 percent from the same period last year.