Yahoo! on Tuesday said it will sell about one-third fewer Alibaba shares than expected — but even this shareholder-friendly news wasn’t enough to deodorize an otherwise stinky quarter.
The Web portal reported that revenue minus traffic acquisition costs for the second quarter fell 3 percent from last year — well below analysts’ already dampened expectations for a gain of 8 percent.
Net earnings of 37 cents a share were up 5 percent from last year, but also fell short of expectations for 38 cents — minus commissions paid to partners for Web traffic.
Chief Executive Marissa Mayer’s surprise gift to shareholders of the additional Alibaba shares briefly pushed Yahoo! shares up in after-hours trading — but once the quarterly results were more fully digested, shares dipped 2.2 percent.
Yahoo! said an amended share repurchase agreement with Alibaba reduced the number of shares it is required to sell in the Chinese company’s IPO from 208 million to 140 million.
Alibaba could fetch a valuation of $150 billion — which would make the additional retained shares a valuable asset for Yahoo!
Mayer also promised to return to shareholders at least half of the after-tax proceeds from its Alibaba stock sale.
“We are not satisfied with our results this past quarter,” Mayer said on a conference call to discuss results.
The CEO, who marks her second anniversary atop the company on Wednesday, attributed the poor results to slower ad sales — the result of a transitioning of its programmatic ad buying platform.
Mayer also said the company saw a “lower-than-expected contribution from premium advertising” last quarter.
She said she expects the issues to be fixed in the next two quarters, but made investors jittery with her prediction for a years-long revamp of the entire company.
“A transformation of this size and scale will take multiple years,” Mayer warned on the conference call.