Yahoo posted its first quarter earnings report today. The company adjusted analyst expectations in January by announcing they expected to make as little as $1.1B in net revenue. While they exceeded that expectation, the company still saw a 80% drop in profit year over year and confirmed the layoffs rumored last week.
MarketWatch reports today that up to 700 positions will be cut in the next few weeks as Q1 net income fell to $117.6M (8 cents per share). By comparison, in Q108, Yahoo saw $536.8M in net income (37 cents per share). Yahoo hit analyst expectations with $1.2B in net revenue. Display advertising revenue declined 13% YOY, contributing to the downturn.
And the $4.6 billion dollar question: will Yahoo make a deal with Microsoft? BoomTown reported yesterday that talks between the companies were “hot and heavy” (as opposed to “heated,” I believe). Deal possibilities include search and display ads and revenue sharing; previously rejected deals include Microsoft buying the company or just the search business.
When she took office in January, Yahoo CEO Carol Bartz was undecided about whether to hold or fold their search business. She said she wanted to get to know the business better, but her instinct was to keep the business. Today Bartz reiterates that sentiment:
“I haven’t changed my position on that,” Bartz said Tuesday. “I’m well versed enough in the search business at Yahoo to say it’s absolutely critical to Yahoo.”
For example, Bartz said many advertisers will want to buy combinations of search and display advertising, as both forms develop over time.
One bright spot, according to MarketWatch: the company tightly controlled costs its first quarter—without layoffs. Have they run out of places to cut the fat?
What do you think: is it too late for Yahoo? Will a deal with Microsoft save them or could they make it alone?