Yahoo! Inc. (NASDAQ:YHOO) stock slipped by as much as 1.5% in the after hours of yesterday’s trade session, after the company posted lukewarm results for its fourth quarter of fiscal year 2015 (4QFY15). Yahoo stock has already slumped by more than 12% since the start of 2016 on the back of lower investor confidence due to the company’s mismanagement and misfortune.
The company generated more than $1.27 billion in total revenue, compared to the consensus estimate of $1.19 billion. The gross search revenues fell by more than 7% as compared to same quarter of last year to, $866 million whereas the paid clicks saw a decline of 10%. Yahoo CEO, Marissa Mayer commented on the company’s quarterly results and stated, “I'm pleased to report that our Q4 performance exceeded guidance across GAAP revenue, revenue ex-TAC, adjusted EBITDA, and non-GAAP Operating Income." Further, Yahoo reported in-line adjusted earnings per share (EPS) of 10 cents.
Yahoo’s core; Display business has been on a downward spiral since FY12 primarily due to the slump in advertising revenues in America and Asia Pacific regions. According to data compiled by Bidness Etc, 80% of the company's total revenue is derived from sales made in America, as per its third quarter.
Yahoo disclosed its intent to separate its Internet-related business from its 15% interest in Alibaba Holdings. Moreover, the company also announced that it will continue to invest in its ‘Mavens’ strategy to offset decline in legacy businesses.
The company has faced the brunt of investors' concerns for the better half of 2015 as its stock plunged by 20% over the last six months of the recently concluded year. Yahoo has also received a letter from the activist investment firm, Starboard to urge the Board to overhaul its top management in a bid to maximize shareholder wealth. Yahoo also dropped yet another bombshell on its shareholders as the company slashed 15% of its workforce as part of its recently-introduced restructuring program.
In addition to soft quarterly earnings, Yahoo also provided a bleak outlook for the coming quarter as the company expects to generate revenue in the range of $1.05-1.09 billion compared to the consensus estimate of $1.14 billion.
Gene Munster, an analyst at Piper Jaffray has maintained a bullish stance on the stock following its fourth quarter earnings. Mr. Munster expects Yahoo to focus primarily on separating the Alibaba stake from the core business in the coming quarters, and cites $10 upside on the stock if Yahoo executes this reverse spinoff in a tax-free resolution. However, investors still seem skeptical that this split will be tax free, or that the company will post a meaningful turnaround. Yahoo shares are currently down by 1.58% to trade at $28.60 in the pre-market trade session today.