Update: 2:05 PM Pacific Time Marissa Mayer's first day on the job coincided with a second quarter earnings report that beat Wall Street's expecatations.
Shares of Yahoo initially rose more than 1% in after-hours trading after the company reported $1.22 billion in revenue, versus $1.23 billion during the same quarter a year earlier. The company's net income was flat at 18 cents a share. (Alternatively, Yahoo net income jumped 45 percent when measured on the "adjusted" basis beloved by Wall Street.)
The news followed by a day the surprise selection of Mayer, whom it plucked from Google.
- Display revenue not including traffic acquisition costs was $473 million, down 1 percent compared to $467 million for the second quarter of 2011.
- GAAP display revenue was $535 million, up 2 percent compared to $524 million during the year-ago quarter
- Search revenue ex-TAC was $385 million, up 4 percent increase from $371 million for the second quarter of 2011.
- GAAP search revenue was $461 million, down 1% compared to $467 million for the second quarter of 2011.
Arguably, Yahoo has been mismanaged for 5 plus years, with plenty of blame to go around. The clearest evidence of mismanagement is the lack of any Free Cash Flow growth for multiple years, despite the clear secular growth drivers of Internet advertising. What we are a bit worried about is that by selecting Ms. Mayer, Yahoo! is explicitly pursuing an aggressive and bold Growth strategy, whereas we believe a Value strategy might be more appropriate.