Yahoo! Inc. (NASDAQ:YHOO) will report its second-quarter earnings after closing bell today, and analysts are expecting to see a decline. CEO Marissa Mayer has made headlines time and time again over the past year since she took the helm, but unfortunately the things she’s been doing haven’t managed to bring in the advertisers, according to Bloomberg’s Douglas MacMillan. Many analysts and investors are betting against her ability to turn the search giant around, although others insist that change takes time.


Yahoo’s Earnings Could Decline

The lack of advertising dollars is one of the biggest reasons analysts give for the expected decline in the search giant’s earnings. Consensus estimates from Zacks indicate that they are looking for earnings per share of 26 cents, a decline from 27 cents last year. They’re predicting that Yahoo! Inc. (NASDAQ:YHOO)’s revenue will also decline in the quarter, falling 11 percent year over year to $1 billion.

The search giant is planning to stream its second quarter earnings call today.

Yahoo Shares Rising Despite Lack Of Turnaround Signs

Under Mayer’s watch, shares of Yahoo! Inc. (NASDAQ:YHOO) have surged more than 70 percent, mostly based on optimism regarding the company’s stakes in Asian companies like Yahoo Japan Corporation (TYO:4689) and Alibaba Group Holdings Ltd. Analysts estimate that the value of Alibaba alone has probably about doubled to approximately $80 billion over the past year.

Meanwhile Mayer has gone on an acquisition spree since going to Yahoo. Among her acquisitions was the pricy $1.1 billion purchase of Tumblr Inc. and mobile app creators Stamped Inc. and Jybe Inc.

Yahoo Still Losing In Advertising, Investors Betting Against It

Advertisers however, apparently aren’t too interested in the 17 or more companies Mayer has helped Yahoo acquire over the past year. EMarketer Inc. predicts that the company’s display ad business share will fall to 7.9 percent this year from 9.2 percent last year. Meanwhile Google Inc (NASDAQ:GOOG)’s share is expected to climb to 18 percent while Facebook Inc (NASDAQ:FB)’s share is expected to increase to 17 percent.

Bloomberg data indicates that options investors are increasingly betting against Yahoo’s recovery. Puts which protect against a 10 percent decline in share price are 3.67 points more expensive than calls for a 10 percent gain.

Yahoo Has Made Progress In Reputation

In spite of Mayer’s lack of progress in attracting advertisers, one area in which she has made progress is in the morale of the company’s reputation in Silicon Valley. The Wall Street Journal’s Amir Efrati and Rachel Emma Silverman report that employees no longer feel embarrassed to work at Yahoo! Inc. (NASDAQ:YHOO). A spokeswoman for the publication reportedly said that the number of people applying to work at the search giant is greater and that the employee turnover rate is about half of what it was a year ago.

Is there a next phase for Yahoo?

Sources told The WSJ that Yahoo’s board has said it would allow her several years to turn the company around, so we may have yet to see the next stage of her strategy begin. She has focused the company’s efforts on its mobile apps, and early signs point to increased interest in the apps. Statistics from Onavo Inc. indicates that the number of iPhone owners which used Yahoo apps was up to 16 percent in June compared to only 8 percent last July.

When including numbers for Tumblr, June’s number goes up to 22 percent. Nonetheless, at this point Tumblr doesn’t add much revenue to Yahoo! Inc. (NASDAQ:YHOO) even though it has over 100 million blogs. Mayer’s acquisition of the company was reportedly aimed at bringing the younger crowd over to Yahoo.

Sources also told The WSJ that Yahoo was talking with Apple Inc. (NASDAQ:AAPL) about preinstalling more Yahoo services on its iOS devices, although it’s not known if the company agreed to do so.

History shows that a significant turnaround like what has been long needed for Yahoo! Inc. (NASDAQ:YHOO) does take years, so now that Mayer has passed the one-year mark as CEO, we’ll just have to see if there is another stage of the turnaround forthcoming.