Analysts await new Yahoo CEO's strategy after dull results

Reuters News
Posted: Jul 17, 2012 8:55 AM

(Reuters) - Analysts adopted a wait-and-watch approach after Yahoo Inc reported flat second-quarter revenue as they awaited new CEO Marissa Mayer's plans for the once iconic company.

Yahoo, which named the Google Inc veteran as its CEO earlier this week, posted a slight decline in profit on Tuesday and did not provide guidance, noting that the company's direction under Mayer "does remain to be seen".

"Second-quarter and operational results may take a secondary role for some time as investors look toward the closing of the Alibaba transaction and its potential capital returns to shareholders, and the debut of newly appointed CEO Marissa Mayer as possible catalysts," analysts at Barclays Capital said.

In a note titled "It Really Wasn't About The Quarter," RBC Capital Markets analysts said they expect investors to focus on Mayer's strategy, which will likely be communicated over the next few months.

Mayer, Yahoo's third chief in 12 months, has the formidable task of turning the company around. Investors are counting on her strong background in products and technology and deep understanding of the Internet.

Some observers have speculated that the surprise hiring of Mayer signals Yahoo's intention to renew its focus on Web technology and products rather than beefing up online content.

"We still need to see a more coherent strategy around the core business and signs of operational improvement to get more constructive on the shares," J.P. Morgan Securities said.

Yahoo's third-quarter results should benefit from the Olympic games and the U.S. elections and a slight sequential revenue growth from its recently-acquired online advertising company Interclick, Barclays said.

JP Morgan raised its price target on the stock to $18 from $17, while Barclays cut its price target to $18 from $20. Yahoo shares closed at $15.60 on Tuesday on Nasdaq.

(Reporting by Aditi Sharma in Bangalore; Editing by Sreejiraj Eluvangal)