Jan 28 2014, 6:22pm CST | by Forbes
In 18 months as CEO of Yahoo, Marissa Mayer has demonstrated an impressive ability to put a cheerful spin on dismal facts. Tuesday afternoon’s year-end earning webcast was no exception.
“I’m very pleased with our progress in my first full year as CEO,” Mayer said. “Getting the company growing at the rate we would like will take several years, but we’re committed to growth in 2014.”
But will Mayer have several years to accomplish that? While earnings were up 40% in the fourth quarter, to 33 cents a share, performance in the core area of ad sales was just as weak as the recent firing of COO Henrique De Castro suggested it would be.
Revenue for the quarter was down 6% to $1.27 billion. That directly reflected a 6% decline in revenue from display ads, the most important category of business.
That’s not good, obviously, but Mayer and her CFO, Ken Goldman, insisted that the earnings contained numerous green shoots that promised future revenue growth. “The underlying fundamentals tell a recovery story,” Goldman said.
One example they cited repeatedly was the new in-stream advertising format introduced in April 2013. Mayer said the new ads have proven popular with users and advertisers. “They’ve demonstrated their effectiveness and we are confident they’ll continue to scale,” Mayer said. Stream ads are one of what she called several “incredibly exciting pieces happening inside of display.”
But Yahoo makes less per ad from the new format than on other display products. They’re the reason display revenue fell even though the number of ads sold was actually up 3% in the fourth quarter. While stream ads have the virtue of translating more easily to mobile screens, even with them, total mobile revenue was “still not material.”
Also not material was revenue from Tumblr, which Yahoo acquired in May for $990 million. But that’s about to change, said Goldman: “We think it will be an important element to our revenue in 2014.”
Is Tumblr’s traffic growing, rather than stuck on a plateau, as I reported it appears to be ? Mayer certainly made it sound that way when she claimed Tumblr’s audience is up 30% since last March.
— Yahoo Inc. (@YahooInc) January 28, 2014
A closer look, however, reveals that to be a cagily chosen time frame: It wasn’t until May 2013 that Tumblr’s traffic hit the plateau where it has languished ever since, according to comScore.
Mayer briefly discussed De Castro’s firing, saying he was “not a fit” and it was “regrettable” that it hadn’t worked out. Beyond that, she demurred “out of respect for Henrique.”
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