Ahead of the Bell: Yahoo set to release 4Q report

AP News
Posted: Jan 24, 2012 7:33 AM

Yahoo Inc.'s fourth-quarter earnings are expected to show the troubled Internet company is still losing ground to Google and Facebook in the battle for online advertising.

The results, due out after the stock market closes Tuesday, come three weeks after Yahoo hired former PayPal executive Scott Thompson to be its fourth CEO in less than five years.

Just like his predecessors, Thompson is being counted on to end a financial and creative malaise that has depressed Yahoo's stock. The shares closed Monday at $15.68, down by about 40 percent from its value five years ago.

Although he is still learning about the company's strength and weaknesses, Thompson will likely face questions about his turnaround strategy during a conference call to discuss the fourth-quarter and outlook for this year.

Yahoo's net revenue has declined from the previous year in 12 consecutive quarters, a streak that is expected to be extended with the release of the company's numbers for the final three months of last year. Cost-cutting has been helping to boost Yahoo's earnings, although the company's net income for the latest quarter is expected to be unchanged versus a year earlier.

Analysts polled by FactSet expect earnings of 24 cents per share on revenue of $1.19 billion, after subtracting Yahoo's ad commissions.

The funk has come at the same time Google Inc. and Facebook have been thriving as they sell more online advertising and their services persuade people to stay on their websites for longer periods.

Google, the Internet search leader, last week reported its fourth-quarter revenue increased by 25 percent from the previous year. Facebook, the owner of the world's largest online social network, doesn't disclose its earnings because it is still a privately company, but figures shared with some of the company's investors last year revealed the company has been growing at a rapid pace.

One major question facing Thompson is whether he intends to trim Yahoo's payroll in pursuit of another earnings lift. Yahoo ended September with 13,700 workers.

Thompson also is likely to be asked about the status of Yahoo's attempts to complete a complex deal that would sell its holdings in China's Alibaba Group and Yahoo Japan.

Analysts believe a deal is more likely to struck with the recent departure of Yahoo co-founder Jerry Yang, who had been seen as an obstacle to breaking up the company. Yang resigned from Yahoo's board and walked away from all his other positions last week.