UPDATED 07:15 EDT / OCTOBER 22 2014

Yahoo CEO Marissa Mayer NEWS

Yahoo skips details on Alibaba opportunity, growth strategy in Q3 earnings call

Yahoo CEO Marissa Mayer

Yahoo CEO Marissa Mayer

Yahoo Inc. have released their Q3 earnings and after many quarters of falling revenues, they have finally reported strong financial performance with sales growth and a higher than expected profit. Yet investors remain confused on how the web giant will grow from here.

Marissa Mayer, CEO of Yahoo said “We had a good, solid third quarter. We delivered $1.094 billion in revenue ex-TAC and $1.148 billion in GAAP revenue. This represents 1 percent growth in revenue ex-TAC and 1 percent growth in GAAP revenue. We achieved this revenue growth through strong growth in our new areas of investment – mobile, social, native and video – despite industry headwinds in some of our large, legacy businesses.”

“I am also pleased to report today that our revenue in mobile is now material,” Mayer went on. “In Q3, we saw mobile revenues in excess of $200 million on a GAAP basis. Further, we estimate that our gross revenues in mobile will exceed $1.2 billion in revenue this year.”

In Yahoo’s webcast, they reported a surprising profit of 52 cents a share before stock compensation costs, compared to 34 cents a year ago. They have also increased their revenue by 1 percent from the previous period to $1.148 billion.

Yahoo’s results are an improvement from previous quarters; however, what investors will want to see is that they can compete with giants like Facebook Inc. and Google Inc. who continue to gain traction in the global digital advertising market.

Mark Mahaney, an Internet industry analyst at RBC Capital Markets said “Things might be getting less worse,” going on to note that “what people are really going to want to see is evidence that they are growing in line with the market.”

However, the biggest question on Yahoo investor’s minds, and something that wasn’t addressed by Mayer, was how they would be taking advantage of its stock holdings in the Alibaba Group and Yahoo Japan. When Yahoo sold 140 million shares in Alibaba’s IPO back in September, they netted $6.3 billion, which is a vast majority of the company’s net earnings of $6.8 billion.

TechCrunch reported that Yahoo are interested in BrightRoll, a video advertising firm, for around $700 million; however, Mayer didn’t mention anything about this either.

Mayer did disclose some numbers on another acquisition, Tumblr. The blogging platform has grown from 300 million to 428 million users over the last year. Advertising revenue is still modest on the platform; however, revenue is expected to hit $100 million next year.

The hedge fund Starboard Value, which has said they own a significant stake in Yahoo, pressed the company last month to explore a merger with AOL Inc. AOL’s CEO, Tim Armstrong, at a tech conference in London on Monday, dismissed the rumors of a Yahoo and AOL merger.

photo credit: The Last Paladin via photopin cc

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