Yahoo earnings fall on slow ad sales

16 July 2013 Last updated at 16:54 ET

This was Yahoo's first earnings report since boss Marissa Mayer bought David Karp's blogging platform Tumblr

Internet giant Yahoo continues to struggle, reporting declining ad revenue in the second quarter of 2013,

The results were the first since the company acquired blogging platform Tumblr for $1.1bn (£73m) in June.

Profits were $331m, up 46% from the same time last year. This was due mostly to the company's investment in Chinese ecommerce site Alibaba.

Display advertising revenue fell 13% in the quarter, while search revenue was down 9%.

Chief executive Marissa Mayer, who celebrated one year at the company on Tuesday, chose to ignore the continued revenue slide. Instead, she hailed the company's relentless release of new mobile offerings.

"We launched more products than ever before, introducing a significant new product almost every week," she said.

Reaction on Wall Street was muted, with shares trading slightly lower on the news.

Problems remain

Although the company's stock has risen more than 70% since Ms Mayer took over, fundamental issues of revenue generation remain.

While digital ad sales are expected to grow overall this year, it is unclear whether Yahoo will be able to get in on the game.

According to research firm eMarketer, Yahoo's share of global digital ad spending is expected to decline to 3.1% in 2013 from 3.37% last year.

In the US, eMarketer estimates that Yahoo's share of US digital ad revenues will decline to 8% from 8.6% in 2012.

Mayer magic?

But Yahoo's turnaround is expected to take longer than one year and Yahoo's board is said to have promised Ms Mayer several years to help revamp the company's fortunes.

She herself has said that her focus at the company would be on its mobile offerings. The earnings release proclaimed the many mobile revamps to its products, such as photo-sharing site Flickr and Yahoo News, conducted under her tenure.

Yahoo has also bought nine technology start-ups in the past quarter, including Tumblr, bringing the total to 17 acquisitions under her watch.

Yahoo hopes this will diversify its base, attract engineering talent and boost company morale.

Investors in the company have been focusing also on its stake in China ecommerce giant Alibaba, which is expected to go public soon.

Source: BBC News - Business http://www.bbc.co.uk/news/business-23337176#sa-ns_mchannel=rss&ns_source=PublicRSS20-sa