Yahoo!'s Q4 revenue slides as ad prices dip again

Alibaba's revenue growth decelerates from recent rip-roaring growth

Yahoo! Inc’s online ad prices slid again in the fourth quarter and Alibaba, the Chinese e-commerce giant in which it owns a big stake, saw revenue growth decelerate from its recent rip-roaring pace.

Yahoo!’s overall revenue fell 6 per cent in the last three months of the year to $1.266 billion, marking four consecutive quarters of eroding revenue. The company said prices for both online display ads and search ads declined in the fourth quarter. The company's shares were down 3.7 per cent at $36.82 in after-hours trading on Tuesday.

Yahoo!’s efforts to revamp its slumping business have come to the forefront following CEO Marissa Mayer’s decision to fire Chief Operating Officer Henrique de Castro this month, after only slightly more than a year on the job.

The move marked the first major change of plans since Mayer took the helm in July 2012, and underscored Yahoo!'s ongoing challenge to rekindle revenue growth.

Yahoo!’s stock has more than doubled since Mayer, a former Google executive, took the helm in July 2012. But analysts say much of the gain is due to aggressive stock buybacks and the expected IPO of Alibaba, in which Yahoo! owns a 24 per cent stake.

Yahoo!’s quarterly results also included some of Alibaba’s financial results from the third quarter.

The Chinese company's revenue increased 51 per cent year-over-year to $1.776 billion. While still robust, that growth rate was slower than the 61 per cent clip that Alibaba delivered in the second quarter and the 71 per cent growth rate in its first quarter.

Yahoo said that net revenue, which excludes fees paid to third-party websites, would range between $1.06 billion and $1.1 billion in the first quarter, a range whose midpoint matched the average analyst expectation of $1.08 billion.

In the fourth quarter, Yahoo!'s revenue from display ads was down 6 per cent year-over-year, while the price per ad, excluding Korea, declined 7 per cent. Yahoo!'s fourth-quarter net income of $348.2 million rose from the $272.3 million earned in the year-ago period.

Excluding certain items, Yahoo! said it earned 46 cents a share, beating the average analyst expectation of 38 cents, according to Thomson Reuters I/B/E/S.

In a conference call with analysts on Tuesday, Mayer and Finance Chief Ken Goldman said that Yahoo!'s revenue would begin to grow again in 2014, thanks to the past year's investments and efforts boosting traffic to Yahoo!'s web properties.

But the company declined to provide a financial forecast for the full year, providing only an outlook for the current quarter.