Yahoo's Earnings: All Eyes on Alibaba

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July 15 (Bloomberg) -- Yahoo will return at least half of the cash it reaps from Alibaba's IPO to investors, providing solace to shareholders who’ve hung on as CEO Marissa Mayer struggles to revive sales. Bloomberg's Paul Sweeney and Cory Johnson have more on "Bloomberg West." (Source: Bloomberg)

Saved yahoo!


It does not look so good.

The core fundamentals that yahoo!

Probably took another step back believe it or not this quarter.

The company missed consensus numbers on revenue and eps second quarter so that was the disappointment.

Third-quarter guidance is always -- also below expectations.

The core display advertising business for them really took a big step back in the second quarter after showing a little bit of life in the first quarter.

Investors are stepping back saying marissa mayer has been their two years and made a lot of investments, a lot of acquisitions, lots of positive core product things but we're just not seeing it in the fundamentals as of yet.

When marissa mayer took over two years ago, everyone said to give her time.

It's been two years.

Paul is saying out who is taking a step act.

Do you remember what i said two years ago?

Warren buffett has this great line i paraphrase.

When a manager with a great reputation takes over a business with a lousy reputation, it's a tough job.

A lot of good people have gone in to try to get it to do better things and have approached it in very different ways.

One thing marissa mayer has done is responding well to wall street.

She had a board where dan loeb was a prominent figure and post for a lot of changes to help shareholders.

She gets credit for tweaking alibaba in ways that will benefit shareholders but this is about business and yahoo!'s influence on the world.

The financial machinations of buying back stock and fixing the alibaba issue to continue to benefit yahoo!, those are financial machinations.

The harder job is getting people to go to yahoo!, use yahoo!, and get advertisers to pay for it.

You have a situation where marissa mayer spent over $1.4 billion in acquisitions in the last two years into the same time you see revenue falling, restructuring taking away operating profits of the business is making less money on an operating basis, forget alibaba.

At the same time, you have revenue is falling.

Of the same time you have been spending over $1 billion in acquisition to boost that revenue.

One of the changes she has made is doing the video conference call and we have a quote from her on that.

Let's take a listen.

Which transformed our culture by focusing our strategy on speed and execution.

We have transformed our products by investing in those that can drive long-term growth.

Along the way, we have reinvented every single major consumer product that yahoo!. now we are transforming the ways in which we generate revenue countering declines with investments in new products.

That was just the audio.

The video was so scary last time.

It is best left to professionals.

Paul, is she just not convincing?

She's not convincing advertisers.

The advertisers are not coming.

That's exactly right.

Think about their core display advertising business.

They are losing tremendous amount of market share to the google and facebook's of the world.

Clearly, the fundamentals are not there.

Over 800 million users every month and the engagement is getting better.

They are making investments in some of the key growth product in terms of video product on the internet.

They are making investments but not converting it to advertising sales.

They admitted this quarter they had an execution problem on advertising sales itch cost the pricing to go down about 24% year-over-year on display advertising pricing.

The execution just has not been there on the advertising side.

And the question simply becomes at what point does the patients wear out?

That is where alibaba comes in.

More good news whereby yahoo!

Can maintain a bigger ownership stake in alibaba post-ipo.

That's good for investors.

She's delivering on that front, the core fundamentals continue to disappoint.

Bloomberg industry director of north american research pulse we need.

I do -- paul sweeney.

This text has been automatically generated. It may not be 100% accurate.


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