Yahoo‘s first-quarter results showed signs of progress that may help boost the credibility of recently hired CEO Scott Thompson as he tries to turn around the long-sputtering internet company.
The strides announced Tuesday were small compared with the huge gains that rivals such as Google and Facebook have been reaping as advertisers shift more of their budgets to the internet.
Nevertheless, Yahoo’s showing for the first three months of the year included an elusive breakthrough. The company’s revenue increased from the prior year for the first time since the U.S. economy was sinking into the depths of the Great Recession in the autumn of 2008. It broke a streak of 13 consecutive quarterly declines in Yahoo’s net revenue – the amount of money that the company keeps after paying commissions to its ad partners.
“We still have a lot of work to do, but it’s an important milestone for us,” Tim Morse, Yahoo’s chief financial officer, said in an interview.
Yahoo’s earnings also rose in the first quarter, but that’s not a new phenomenon. The company’s net income had also been rising under Thompson’s predecessor, tough-talking Carol Bartz, mostly because of cost cutting.
But Bartz never could produce a year-over-year increase in Yahoo’s quarterly revenue before she was fired last September. Yahoo lured Thompson away from eBay Inc.’s online payment service, PayPal, three months ago.
In Thompson’s first full quarter as CEO, Yahoo earned $286 million, or 23 cents per share. That represented a 28% increase from net income of $223 million, or 17 cents per share, at the same time last year.
The earnings for this year’s quarter exceeded the average estimate of 17 cents per share among analysts surveyed by FactSet.
Thompson didn’t spend much time crowing about the first-quarter revenue increase, probably because it was such a small gain. Net revenue totalled $1.08 billion, an increase of $13 million, or 1%, from the same time last year.
Google’s first quarter net revenue, in contrast, soared by 24% from last year to $8.14 billion. The overall internet ad market in the U.S. increased by about 23%, according to the research firm eMarketer.
In a Tuesday conference call, Thompson assured analysts he won’t be happy until Yahoo’s revenue is keeping pace with the rest of the Internet ad market.
“Yahoo must be nimble, responsive and act with a real sense of urgency,” Thompson said on the call. “We have to think and to move like a growth company.”
